Work

Exploring the Nature of “Trader Intuition”

Year: 2010

Type: article

Abstract: ABSTRACT Experimental evidence has consistently confirmed the ability of uninformed traders, even novices, to infer information from the trading process. After contrasting brain activation in subjects watching markets with and without insiders, we hypothesize that Theory of Mind (ToM) helps explain this pattern, where ToM refers to the human capacity to discern malicious or benevolent intent. We find that skill in predicting price changes in markets with insiders correlates with scores on two ToM tests. We document GARCH‐like persistence in transaction price changes that may help investors read markets when there are insiders.

Source: The Journal of Finance

DOI: 10.1111/j.1540-6261.2010.01591.x

Authors: ANTOINE J. BRUGUIER, STEVEN R. QUARTZ, PETER BOSSAERTS

Institutions: California Institute of Technology, The University of Melbourne, University of Cambridge

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2096941720

FWCI: 11.14

Cites: 30

Cited by: 131

Related to: 10