Behavioral Finance Meets Experimental Macroeconomics: On the Determinants of Currency Trade Decisions.
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| Title: | Behavioral Finance Meets Experimental Macroeconomics: On the Determinants of Currency Trade Decisions. |
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| Authors: | Kaiser, Johannes (AUTHOR), Kube, Sebastian (AUTHOR) |
| Source: | Journal of Behavioral Finance. 2009, Vol. 10 Issue 1, p44-54. 11p. 2 Black and White Photographs, 3 Charts, 3 Graphs. |
| Subjects: | Macroeconomics, Finance, Business, Interest rates, Foreign exchange rates, Financial institutions, Communication in financial institutions |
| Abstract: | A novel approach which conjoins elements of experimental macroeconomics and behavioral finance allows us to study the components of industrial firms' currency trade decisions in the controlled environment of a laboratory. We analyze how firms operate in the currency market in a deterministic two-country model with two currencies. Consistent with presumptions of real-world behavior, subjects in our experiment tend to base their trade decisions on definite rather than on uncertain key data: Interest rates have a high impact, while technical analysis plays a minor role. We finally demonstrate how a simple decision rule that incorporates our findings might outperform the actually observed trade decisions. [ABSTRACT FROM AUTHOR] |
| Copyright of Journal of Behavioral Finance is the property of Taylor & Francis Ltd and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) | |
| Database: | Psychology and Behavioral Sciences Collection |
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