By using an extensive dataset of more than 32 million messages on 91 firms posted on the Yahoo! Finance message board over the period January 2005 to December 2010, we examine whether investor ...sentiment as expressed in posted messages has predictive power for stock returns, volatility, and trading volume. In intertemporal and cross-sectional regression analyses, we find no evidence that investor sentiment forecasts future stock returns either at the aggregate or at the individual firm level. Rather, we find evidence that investor sentiment is positively affected by prior stock price performance. We also find no significant evidence that investor sentiment from Internet postings has predictive power for volatility and trading volume. A distinctive feature of our study is the use of sentiment information explicitly revealed by retail investors as well as classified by a machine learning classification algorithm and a much longer sample period relative to prior studies.
This paper examines the effects of cognitive abilities and non-cognitive skills on gambling behaviors in Australia. We use the scores for three cognitive functioning tasks as measures of cognitive ...abilities. Locus of control and the Big Five personality traits are used as measures of non-cognitive skills. We find that cognitive abilities affect both gambling participation and problem gambling. While locus of control does not affect people’s participation in gambling, gambling participants with strong internal locus of control are less likely to become a problem gambler than those with external locus of control. We also show that personality traits are important factors for both gambling participation and problem gambling. There is also evidence that both cognitive and non-cognitive skills affect gamblers’ choice between skill-and-chance gambling and pure-chance gambling. Our findings seem to support the view that market imperfection could at least explain some individuals’ participation in gambling.
•Changes in time preferences induced by tsunami in the Great East Japan Earthquake.•Study uses panel survey data before and after the earthquake.•Employs the (β, δ) model to capture individuals’ time ...preferences.•Increased present bias (smaller β) and insignificant change in time discount factor (δ).•This change persists even five years after the earthquake.
This study examines whether individuals’ time preferences are affected by the damage caused by the tsunami resulting from the Great East Japan Earthquake of 2011 using panel surveys before and after the earthquake. When the change in time preferences is measured using the (β, δ) model, present bias tendency increases (shrinking β), although there is no statistically significant change in the time discount factor (δ) for those affected by the tsunami. The hyperbolic discounting dummy also shows an increase in time inconsistency. This change persists even five years after the earthquake.
•We run tax evasion experiments on three samples with varied tax filing experience.•Students are the least compliant sample, but most responsive to treatment changes.•Non-students are more compliant ...but non-responsive to treatment changes.•We find strong evidence of the bomb-crater effect only in the student sample.•We show sample differences in behavior are due to compliance norms outside the lab.
We report on data from a real-effort tax compliance experiment using three subject pools: students, who do not pay income tax; company employees, whose income is reported by their employer; and self-employed taxpayers, who are responsible for filing and payment. While compliance behavior is unaffected by changes in the level of, or information about the audit probability, higher fines increase compliance. We find subject pool differences: self-assessed taxpayers are the most compliant, while students are the least compliant. Through a simple framing manipulation, we show that such differences are driven by norms of compliance from outside the lab.
•The values of parameters of a well-calibrated model are useful in detecting micro behavior.•We illustrate the evolution of banks strategy in response to different economic conditions.•It explores ...the banks reactions to financial shocks.•The result is an early warning indicator which anticipates phases of instability.
In this paper, we show that the values of parameters of a well-calibrated model are useful in detecting micro behavior. We use a calibration procedure suitable for validating agent-based models to show how the evolution of model parameters, obtained via a rolling window estimation, illustrates the evolution of agents’ strategies in response to different economic conditions. In this regard, we calibrate the well-known financial model of Brock and Hommes using three banking indices (i.e., the S&P SmallCap 600 Financials Index, the STOXX Europe 600 Banks, and the STOXX Asia/Pacific 600 Banks) running from 1994 to 2016. The choice of a spatially and temporally diversified dataset allows us to analyze differences and similarities in the behavior of banks belonging to the different macro areas, as well as to capture agents’ reaction to the several economic phases characterizing the time series investigated.
•We study interactions of Pakistani students in institutions of varying religiosity.•Madrassa students are among the most trusting.•There is a high level of trust among all groups.•We fail to find ...evidence of in- or out- group bias either in trust or tastes.•The trustworthiness of Madrassa students is under-estimated by some groups.
Little is known about the behavior of Madrassa (Islamic religious seminaries) students, and how other groups in their communities interact with them. To investigate this, we use data from economic decision-making experiments embedded in a survey that we collected from students pursuing bachelors-equivalent degrees in Madrassas and other educational institutions of distinct religious tendencies and socioeconomic background in Pakistan. First, we do not find that Madrassa students are less trusting of others; in fact, they exhibit the highest level of other-regarding behavior, and expect others to be the most trustworthy. Second, there is a high level of trust among all groups. Third, within each institution group, we fail to find evidence of in-group bias or systematic out-group bias either in trust or tastes. Fourth, we find that students from certain backgrounds under-estimate the trustworthiness of Madrassa students.
•We study horizontal welfare benefit conditionality.•We model the interactions between deserving poor, undeserving poor and the social service provider as a psychological game.•The desirability of ...horizontal conditionality depends on the quality of the monitoring technology.•When the technology is imperfect, conditional benefits may lead to a non-take-up situation that is Pareto dominated by unconditional benefits.
We study a model in which poor individuals of different types request a service and may suffer from the discrepancy between the service provider's beliefs and their true type. The utility loss resulting from such a discrepancy is referred to as an identity cost. Types are private information but service providers ideally prefer to favour individuals considered high type. They may choose to condition social service on an observable characteristic that is correlated with types but that can be manipulated by low type individuals at a cost. We show that whether conditionality enhances social welfare depends on this cost. If the cost is too low, high type individuals refrain from requesting the service because of the resulting identity cost, bringing about a so-called non-take-up equilibrium. In this case, unconditionality of the service provision is a Pareto improvement.
•We use a large international panel dataset on chess competitions.•Photos of 626 expert chess players are rated for attractiveness in a large survey.•Male players choose riskier strategies when ...playing against attractive female opponents.•Playing riskier against attractive women does not improve performance.•Women's strategies are not affected by the attractiveness of the opponent.
We explore the relationship between attractiveness and risk taking in chess. We use a large international panel dataset on high-level chess competitions which includes a control for the players’ skill in chess. This data is combined with results from a survey on an online labor market where participants were asked to rate the photos of 626 expert chess players according to attractiveness. Our results suggest that male chess players choose significantly riskier strategies when playing against an attractive female opponent, even though this does not improve their performance. Women's strategies are not affected by the attractiveness of the opponent.
•This paper studies the transmission of pro-social values from parents to children through a public goods game experiment.•We cannot reject the null that the correlation between the degree of ...cooperation of a child and that of his or her parent is zero.•That is, there is lack of evidence in our data that prosocial values are transmitted from parents to children.•This finding is robust to the inclusion of demographic and socio-economic controls.
This paper studies whether prosocial values are transmitted from parents to their children. We do so through an economic experiment in which children and their parents play a standard public goods game. The experimental data presents us with a surprising result. While we find significant heterogeneity in cooperative preferences in both parents and children, we cannot reject the null that the correlation between the degree of cooperation of a child and that of his or her parent is zero. That is, there is lack of evidence in our data that prosocial values are transmitted from parents to children. This finding is robust to the inclusion of demographic and socio-economic controls. Finally, parents show a significant degree of conditional cooperation, thus confirming the results of the existing experimental literature; such conditional cooperation is however absent in children.
We examine subjects’ behavior in sender–receiver games where there are gains from trade and alignment of interests in one of the two states. We elicit subjects’ beliefs, risk and other-regarding ...preferences. Our design also allows us to examine the behavior of subjects in both roles, to determine whether the behavior in one role is the best response to the subject's own behavior in the other role. The results of the experiment indicate that, when acting as senders, the majority of subjects adopt deceptive strategies by sending favorable message when the true state of the nature is unfavorable. When acting as receivers, the majority of subjects invest conditional upon receiving a favorable message. The investing behavior of receivers cannot be explained by risk preferences or as a best response to subject's own behavior in the sender's role. However, it can be rationalized by accounting for elicited beliefs and other-regarding preferences. Finally, the honest behavior of some senders can be explained by other-regarding preferences. Thus, we that find liars do believe, and that individuals who care about the payoffs of others tend to be honest.
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