Mental Capabilities, Heterogeneous Trading Behaviour and Performance in an Experimental Asset Market
Bibliographic Data
| ID | 9705502 |
|---|---|
| Authors | Andreas Hefti (0000-0001-9981-7640, Zurich University of Applied Sciences & University of Zurich), Steve Heinke (0000-0002-9000-5897, University of Fribourg), Steve Heinkey (University of Fribourg), Frédéric Schneider (0000-0003-2234-3437, University of Cambridge) |
| Year | 2025 |
| Volume | 135 |
| Issue | 671 |
| Pages | 2161-2191 |
| Publication date | 2025-09-24 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (PUBLISHER • GB) |
| DOI | 10.1093/ej/ueaf003 |
| OpenAlex | W4408706166 |
| Language | EN |
| References cited | 90 |
We study how variations in two mental capabilities—analytical capability (quantitative reasoning) and mentalising (assessing others’ behaviour)—drive heterogeneity in evaluations of identical information about an asset’s fundamental value and past prices. Our mental framework aligns with regularities observed in experimental asset markets, providing a cognitive basis for heterogeneous trading behaviour. Applied to an experimental market, it predicts that trading, performance and bubble-crash patterns crucially depend on mental capability differences. Traders proficient in both capabilities succeed most, while performance is otherwise non-monotonic in capabilities. Experimental results support these predictions, highlighting the important role of mental capabilities in asset markets
Asset (computer security · Business · Cognitive psychology · Economic bubble · Economics · Machine learning · Mentalization · Microeconomics · Value (mathematics · Complex Systems and Time Series Analysis · Computer Science · Finance · Psychology
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| Citation velocity | historical |
|---|---|
| Highly cited | No |