Category: Research Updates

What is the effect of Testosterone on financial trading and prices?

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IFREE Grant Recipients, Amos Nadler et al., wanted to study just that. Using male participants, the researchers divided them into two groups. One group received a placebo treatment and the other received a topical gel containing andro 400 testosterone. The participants traded in a market experiment. The research, published in Management Science, shows that increasing testosterone in men increases bid prices, generates larger and longer-lasting bubbles, and slows the incorporation of fundamental value. This is the first experimental study to study how testosterone affects trading and prices. The research results have wide implications outside the laboratory and are significant to consider when discussing the stock market and other financial markets.

Read the paper online: The Bull of Wall Street: Experimental Analysis of Testosterone and Asset Trading

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IFREE Summer Scholar Publication in the Southern Economic Journal

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Man has developed rules of conduct not because he knows but because he does not know what all the consequences of a particular action will be.

–F.A. Hayek

As a summer scholar in the IFREE-Sponsored Summer Scholar Program, Bradley Sherwood worked on research with Summer Scholar mentors, Drs. Bart Wilson and Jan Osborn of Chapman University. This led to the publication entitled, “Conduct in narrativized trust games,” published in the Southern Economic Journal, where the above quote is found in the abstract. Continue Reading →

Lead Article Published in Review of Industrial Organization

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Feb. 2010

Dr. Bart Wilson of Chapman University, with Dr. Artie Zillante at UNC Charlotte, published “More Information, More Ripoffs: Experiments with Public and Private Information in Markets with Asymmetric Information”, as the lead article in the Review of Industrial Organization’s February issue.

Models of markets for used cars predict that sellers can pawn off lemons on trusting buyers. However, in a laboratory experiment Profs. Wilson and Zillante find stark evidence that sellers cannot pawn off lemons on buyers when transaction prices are private. Only when transaction prices are public can owners of lemons successfully masquerade as sellers of high quality goods. Artie is a former IFREE-assisted post doc at GMU.