We are pleased to invite you to an upcoming seminar hosted by the International Centre for Resilient Supply Chains and the Behavioral and Decision Research Lab, Faculty of Business and Management.

Location: T7-106-R1

We investigate the psychological predictors of market runs in an experimental setting. Specifically, we examine the effect of emotions, personality traits, luck, communication, and peer action on the probability of a run occurring in a financial market. We conduct a laboratory experiment with a 2x2 design, varying the liquidation value distribution and the availability of pre-play communication. The participants act as investors with incentive to beat the market by preempting other investors when the fundamental value is sufficiently low. We use facial reading technology and surveys to measure emotions and personality traits among participants during the experiment. We find that traits (neuroticism and anxiety) and emotions associated with worry or negativity increase the likelihood of an investor entering a market run while investors that get “lucky" are less likely to sell in subsequent markets. We also find evidence of panic selling driven by herd mentality. Overall, our results suggest that individual psychological factors are significant predictors of participation in financial market runs.