Delegated portfolio management : an asset market experiment

• Main Authors: Tey, Dilys Cassandra Hui Ning, Siow, Yu Jin, Yer, Jia Yan
• Other Authors: Yohanes Eko Riyanto
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2020
• Subjects: Social sciences::Economic development
• Online Access: https://hdl.handle.net/10356/137744
• Institution: Nanyang Technological University

This paper contributes to existing prediction market and experiment market literature by exploring the implications of social communication and information exchange in financial markets. We find that information acquisition choices are not associated with the presence of social traders. Instead, the presence of insiders reduces the information acquired by other participants in the same market, and improves market performance through greater earnings and lower income disparity within the market. Participants in the insider market also do not trade according to prior price expectation beliefs and are more precise in forecasting accuracy. Finally, the presence of copying is associated with greater mispricing as a result of misleading market information acquired. These findings shed some light on the efficiency of social trading platforms, and emphasises the idea that social context plays a paramount role in driving behaviour and outcomes.