Women in SEF mentoring/early stage work sessions
Welcome to the Society for Experimental Finance Women mentoring/early stage work sessions!
This is an invitation for all members of the SEF to join a new initiative aiming to create a network of support and mentorship for women in our field. We propose to meet virtually in the following first Tuesdays for now because meetings will be almost 100% scientific, with one woman scheduled to present an early-stage research project for 45 minutes, and 15 minutes of open discussion (of the presentation or other). Simultaneously, we will start a virtual clipboard for all to propose topics for discussion in the meeting. As they accumulate, a scheduled monthly meeting can be dedicated to the discussion of clipboard topics (via an interview to a special guest, a round table, town house, or another format) and consequently the time schedule could be arranged accordingly.
We plan to meet for four Tuesdays. The first meeting was held on November 8th, 2022, at 8pm UTC (9pm Paris, 3pm New York; Wednesday, November 9, 7am in Sydney). We understand that the timing may not be ideal for all, but we tried to keep the series as inclusive as possible to the different time zones. While the meeting is women and experimental finance related, we welcome those that do not define themselves as women and yet would like to participate and we will extend the invitation to persons working on experimental finance that are not yet members of the society.
The Role of Financial Markets in Mitigating Credit Market Bubbles
joint work with Peter Bossaerts, Dan Lu, and Anh Tran
We investigate how long an insolvent debtor can avoid default when survival is beneficial to creditors collectively, but individual creditors gain by forcing early repayment. Theory predicts that the debt is not rolled over and default is immediate. With 23 experimental sessions, default is never immediate, with or without secondary debt markets. With markets, prices do not reveal survival length but correlate with payoffs. Creditors are better off with markets, but markets exacerbate wealth inequality. Survival length is reduced upon repetition with the same cohort. When new creditors are introduced, survival length remains constant, even with access to default history.
Link to the paper
Tuesday, May 2 2023, 4pm UTC (5pm Paris, 6pm Jerusalem, 11am New York, 8am Los Angeles) Camelia Kuhnen, University of North Carolina
A new perspective on gender differences in risk attitudes: Studies have frequently found that women are more risk averse than men (Eckel and Grossman, 2002; Agnew et al., 2008; Borghans et al., 2009). This gap can have far reaching consequences, such as fewer female entrepreneurs, fewer women in managerial positions, suboptimal investment and saving strategies, and the gender pay gap. Although the gender difference in risk attitude has been replicated in many studies (we note that there are some exceptions), economists have struggled with how to use this finding to restore gender balance in economic decision-making. The main reason for this is that traditional economic models take risk preferences as static primitives which makes it impossible to establish the underlying mechanism that leads to gender differences in risk attitudes. As such, we are no closer to devising a solution to address this risk attitude-based gender inequality. In this project, we take a different approach to risk attitude. Instead of treating it as a primitive, we use neuroeconomic and behavioural economic models in which risk attitude is determined by the reference point. We then evaluate whether there is a gender difference in the reference point, explaining the gender difference in risk aversion observed using the traditional approaches. The advantage of our approach is that it can explain the origins of the gender differences in risk attitudes and suggest policies that would reduce or eliminate these differences.
Do prices reveal information about dividends in asymmetric sequential asset markets? An Experimental Study: This paper tests experimentally whether prices reveal information about dividends in a two-period asymmetric information investment game via a call market based on Benhabib and Wang (BW, JET 2015). Endowed with assets, short-term traders value the asset for its sale value. Long-term traders, who hold no assets, value the asset for its dividend, paid at the end of the second period. In our control treatment with complete information, we provide all traders about the dividend paid on all assets, while in an incomplete Information treatment, only the short-term traders know the dividends. In the first period of the game, short-term traders trade among themselves. In the second period, all traders observe the market clearing price. Assets held by short-term traders are sold to long-term traders, theoretically always at the first-period trading price, which is experimentally confirmed. First-period prices, however, show high variability. Under complete information, prices are equal to dividends as in the unique Nash equilibrium. Under incomplete information, we observe multiple pricing behavior, similar to the multiple equilibria calculated in BW (2015). In two incomplete Information sessions, most prices in Period 1 fully reveal the asset's dividend. In a third session, most prices are anchored near the expected median dividend. However, in three further sessions, most prices qualitatively resemble sunspot equilibria features: they are above (below) the dividend when dividends are lower(higher) than the mean expected dividend. We conclude that prices do not consistently reveal information to uninformed traders. The reason is that there are optimistic and pessimistic short-term traders who do not trade at fundamental dividends. [link to the paper]