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Article Dans Une Revue Journal of Economic Dynamics and Control Année : 2022

Number sense, trading decisions and mispricing: An experiment

Résumé

We show that the acuity of the Approximate Number System (ANS), a cognitive system that allows humans and many animal species to evaluate quantities without using exact calculations, is a strong predictor of subjects’ earnings in experimental markets. We measure ANS acuity with a bounded number line estimation (NLE) task and find that subjects who perform better on the NLE task, obtain higher earnings in a continuous double auction experimental market. We underline two channels through which high ANS acu- ity subjects achieve better performance: they are rewarded for offering liquidity and are faster at exploiting trading opportunities. We also show that, in a given market, the distribution of NLE scores influences mispricing. Our results are unchanged when we control for differences in trading intensity, risk aversion, background education or demographic characteristics.
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Dates et versions

hal-03518593 , version 1 (10-01-2022)

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Tristan Roger, Patrick Roger, Marc Willinger. Number sense, trading decisions and mispricing: An experiment. Journal of Economic Dynamics and Control, 2022, 135, pp.104293. ⟨10.1016/j.jedc.2021.104293⟩. ⟨hal-03518593⟩
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