Greed and Individual Trading Behavior in Experimental Asset Markets

70 Pages Posted: 13 Jan 2021

See all articles by Karlijn Hoyer

Karlijn Hoyer

Tilburg University

Stefan Zeisberger

Radboud University, Institute for Management Research; University of Zurich, Department of Banking and Finance

Seger Breugelmans

Tilburg University

Marcel Zeelenberg

Tilburg University - Faculty of Social and Behavioural Sciences

Date Written: December 1, 2020

Abstract

Greed has been shown to be an important economic motive. Both the popular press as well as scientific papers have mentioned questionable practices by greedy bankers and investors as one of the root causes of the 2008 global financial crisis. In spite of these suggestions, there is as of yet no substantive empirical evidence for a contribution of greed to individual trading behavior. This paper presents the result of 15 experimental asset markets in which we test the influence of greed on trading behavior. We do not find empirical support for the idea that greedier investors trade fundamentally different from their less greedy counterparts in markets. These findings shed light on the role of greed in trading and the emergence of asset market bubbles in specific, and of the financial crisis in general. Directions for future research are discussed.

Keywords: dispositional greed, experimental finance, experimental asset markets, bubbles, mispricing

JEL Classification: G11, G12, G40, G41

Suggested Citation

Hoyer, Karlijn and Zeisberger, Stefan and Breugelmans, Seger and Zeelenberg, Marcel, Greed and Individual Trading Behavior in Experimental Asset Markets (December 1, 2020). Available at SSRN: https://ssrn.com/abstract=3740473 or http://dx.doi.org/10.2139/ssrn.3740473

Karlijn Hoyer (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Stefan Zeisberger

Radboud University, Institute for Management Research ( email )

Nijmegen
Netherlands

University of Zurich, Department of Banking and Finance ( email )

Zürich
Switzerland

Seger Breugelmans

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Marcel Zeelenberg

Tilburg University - Faculty of Social and Behavioural Sciences ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
31 (13) 4668276 (Phone)
31 (13) 4662370 (Fax)

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