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Let's chat... When communication promotes efficiency in experimental asset markets: A Review

Author

Listed:
  • Brice Corgnet

    (EM - EMLyon Business School, GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Mark Desantis

    (Chapman University)

  • David Porter

    (Chapman University)

Abstract
The growing prevalence of stock market chat rooms and social media suggests communication between traders may affect market outcomes. Using data from a series of laboratory experiments, we study the causal effect of trader communication on the price efficiency of markets. We show that communication allows markets to convey private information more effectively. This effect is most pronounced when the communication platform publicizes a reputation score that might identify a person as not being truthful. This illustrates the need for market designers to consider social interactions when designing market institutions to leverage the social motives that foster information aggregation. Abstract The growing prevalence of stock market chat rooms and social media suggests communication

Suggested Citation

  • Brice Corgnet & Mark Desantis & David Porter, 2020. "Let's chat... When communication promotes efficiency in experimental asset markets: A Review," Working Papers halshs-02509127, HAL.
    • Handle: RePEc:hal:wpaper:halshs-02509127
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02509127
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    File URL: https://shs.hal.science/halshs-02509127/document
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    Citations

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    Cited by:

    1. Brice Corgnet & Cary Deck & Mark DeSantis & David Porter, 2022. "Forecasting Skills in Experimental Markets: Illusion or Reality?," Management Science, INFORMS, vol. 68(7), pages 5216-5232, July.
    2. Brice Corgnet & Camille Cornand & Nobuyuki Hanaki, 2021. "Emotional Markets: Competitive Arousal, Overbidding and Bubbles," Working Papers 2117, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Brice Corgnet & Camille Cornand & Nobuyuki Hanaki, 2021. "Risk-Taking and Tail Events Across Trading Institutions," Working Papers hal-03468913, HAL.

    More about this item

    Keywords

    Information aggregation; market efficiency; communication; experimental asset markets; social market design;
    All these keywords.

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