Herding behavior in prediction markets: evidence from UK financial spread trading markets
Herding behavior in prediction markets: evidence from UK financial spread trading markets
We contrast the degree (strong vs. weak), nature (interaction between more and less informed traders; MI and LI, respectively) and patterns of herding behavior (via their feedback strategies) amongst MI and LI traders and their speed of reaction to shifts in trading by these groups. This is achieved by analyzing individual investment records of 1,943 traders in UK spread-trading markets (2010-2012). We find that herding is far more prevalent than previous studies suggest, particularly amongst LI, herding activity of MI and LI are related and the means used to distinguish MI and LI needs to be considered carefully.
herding behavior, prediction markets, spread betting, informed traders, high frequency data
39-83
Tai, Chung-Ching
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Gulthawatvichai, Sarist
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Sung, Ming-Chien
2114f823-bc7f-4306-a775-67aee413aa03
Johnson, Johnnie
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Cheah, Jeremy Eng-Tuck
bf4f8715-22fd-4ffa-9ab3-be501fd3415e
Tai, Chung-Ching
b3370b23-7410-4254-99bc-6711046e1095
Gulthawatvichai, Sarist
59bd3221-84b0-4988-8833-b6f5b24801f9
Sung, Ming-Chien
2114f823-bc7f-4306-a775-67aee413aa03
Johnson, Johnnie
6d9f1a51-38a8-4011-a792-bfc82040fac4
Cheah, Jeremy Eng-Tuck
bf4f8715-22fd-4ffa-9ab3-be501fd3415e
Tai, Chung-Ching, Gulthawatvichai, Sarist, Sung, Ming-Chien, Johnson, Johnnie and Cheah, Jeremy Eng-Tuck
(2023)
Herding behavior in prediction markets: evidence from UK financial spread trading markets.
Journal of Prediction Markets, 17 (1), .
(doi:10.5750/jpm.v17i1.2037).
Abstract
We contrast the degree (strong vs. weak), nature (interaction between more and less informed traders; MI and LI, respectively) and patterns of herding behavior (via their feedback strategies) amongst MI and LI traders and their speed of reaction to shifts in trading by these groups. This is achieved by analyzing individual investment records of 1,943 traders in UK spread-trading markets (2010-2012). We find that herding is far more prevalent than previous studies suggest, particularly amongst LI, herding activity of MI and LI are related and the means used to distinguish MI and LI needs to be considered carefully.
Text
Herding
- Accepted Manuscript
More information
Accepted/In Press date: 20 May 2022
e-pub ahead of print date: 19 July 2023
Keywords:
herding behavior, prediction markets, spread betting, informed traders, high frequency data
Identifiers
Local EPrints ID: 467727
URI: http://eprints.soton.ac.uk/id/eprint/467727
ISSN: 1750-6751
PURE UUID: a7ffa70a-100e-4515-9685-e76ea1132aae
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Date deposited: 21 Jul 2022 16:34
Last modified: 17 Mar 2024 07:22
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Contributors
Author:
Sarist Gulthawatvichai
Author:
Johnnie Johnson
Author:
Jeremy Eng-Tuck Cheah
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