Handbook of Experimental Finance: (Research Handbooks in Money and Finance series)

Offering an in-depth overview of the field's past, present, and future, this Handbook provides a comprehensive analysis of the current topics, methodologies, findings, and breakthroughs in research conducted with the help of experimental finance methodology. Suggesting innovative ways of navigating and structuring financial markets, it also showcases the diversity and promise of using experiments in finance. With contributions from leading experts, the Handbook begins with a series of investigations into human behavior in financial decision-making, asking methodological questions regarding subject pool choice, cognitive finance, physical and physiological measurement, and research directions. Stressing the dual nature of experimental finance, chapters then relate to market experiments by exploring applied topics, including bank runs, financial accounting and nudging. Finally, it examines experimental tools and methodologies, critical perspectives, roadmaps for implementation, and empirical testing of finance theories. With examples of experiments that test the fundamental theoretical constructs in finance, this Handbook will prove a vital resource to students and scholars of finance, financial economics, and experimental methodology. It will also prove useful to practitioners and policymakers looking to innovate and experiment with their approaches to financial decision-making.

Table of Contents:
Contents: Introduction to the Handbook of Experimental Finance 1 Sascha Füllbrunn, Ernan Haruvy PART ONE BASIC RESEARCH 1 Current and possible future research directions in experimental finance 12 Charles Noussair 2 Experiments in finance: From no to maybe to yes! 17 Pascal Kieren, Martin Weber 3 The complementarity of experimental and archival finance research 26 Lucy F. Ackert, Hong Qu 4 Physiological measures in experimental finance 41 Eyal Ert, Abigail Hurwitz, Sven Nolte 5 Ambiguity, experience and unforeseen events in experimental finance 54 Stefan T. Trautmann 6 Experimental finance and financial professionals 64 Sascha Füllbrunn, Christoph Huber, Christian König-Kersting 7 Cognitive finance 73 Ciril Bosch-Rosa, Brice Corgnet 8 The perils of a blanket model: Financial anomalies and loss aversion 89 Eldad Yechiam 9 Testosterone and financial risk taking 98 John Dinsmore, Eric Stenstrom, Marcelo Vinhal Nepomuceno 10 On attention to information: The checking paradox 105 Yefim Roth, Ofir Yakobi 11 The double-channeled effects of experienced payoffs in investment decisions 117 Peiran Jiao 12 Investing other people’s money 132 Sascha Füllbrunn, Ola Kvaløy, Wolfgang Luhan 13 From the field to the lab: Professionals and bidding aggression 145 Timo Heinrich, Matthew James Walker 14 Coordination games: Escaping the straitjacket 152 Christos A. Ioannou PART TWO APPLIED RESEARCH 15 Perishable goods versus re-tradable assets: A theoretical reappraisal of a fundamental dichotomy 162 Sabiou M. Inoua, Vernon L. Smith 16 Pairing multi-market theory with experiments 172 Elena Asparouhova, Peter Bossaerts, Sean Crockett 17 The effect of favorable and unfavorable information on asset prices 194 Charles Noussair, Steven Tucker, Mark Ryan 18 Market experiments with multiple assets: A survey 213 John Duffy, Jean Paul Rabanal, Olga A. Rud 19 Individual evolutionary learning and zero-intelligence in the continuous double auction 225 Jasmina Arifovic, Anil Donmez, John Ledyard, Megan Tjandrasuwita 20 Using results from learning to forecast laboratory experiments to predict the effect of futures markets on spot market stability 250 Johan de Jong, Joep Sonnemans, Jan Tuinstra 21 Are you experienced? How the time spacing of traders’ market experience impacts bubble formation in experimental asset markets 267 Jason Shachat, Hang Wang 22 Monetary policy and cash flow irregularity as drivers of asset price bubbles: An experimental study 281 Dragana Draganac, Miloš Božović 23 Algorithmic trading in experimental markets with human traders: A literature survey 302 Te Bao, Elizaveta Nekrasova, Tibor Neugebauer, Yohanes E. Riyanto 24 Asset market experiments with diverse information 323 Dominik Schmidt, Thomas Stöckl 25 Experimental bank runs 347 Hubert J. Kiss, Ismael Rodriguez-Lara, Alfonso Rosa-Garcia 26 Experiential learning in finance education – Applying experimental finance methodology 362 Éva Kaczkó, Michael Razen 27 Experimental research in financial accounting 375 Daniel Reimsbach, Karen De Meyst 28 Corporate governance experiments 384 Ernan Haruvy 29 Nudging and RCTs in finance: A review of recent literature 395 Réka Heim, Jürgen Huber 30 A critical perspective on the conceptualization of risk in behavioral and experimental finance 408 Felix Holzmeister, Christoph Huber, Stefan Palan 31 Stated risk preference predicts risk appetite in structured investment 414 Doron Sonsino, Yaron Lahav, Yefim Roth Index 423

About the Author :
Edited by Sascha Füllbrunn, Associate Professor of Finance, Institute for Management Research and Department of Economics and Business Economics, Radboud University, Nijmegen, the Netherlands and Ernan Haruvy, Professor, Desautels Faculty of Management, McGill University, Montreal, Quebec, Canada

Review :
‘The key aim of this Handbook is “to showcase the diversity of experimental finance topics and solidify the distinctiveness of experimental finance as a stand-alone ‘field’ from experimental economics” (p.1). This is intended to educate and to influence for all readers including uninitiated readers. At the end of studying this Handbook, all readers are convinced that this aim is accomplished. This is congratulatory for the eminent editors and all the contributors of 31 chapters, each focusing on a unique topic and contribution, in this excellent Handbook.’