Event: Other Events

CFTC Senior Financial Economist's Research Paper Named Winner of the 2004 FMA Competitive Paper Award in the Area of Market Microstructure

CFTC Senior Financial Economist Michael S. Haigh, and coauthors John List and Jonathan Alevy, both of the University of Maryland, recently undertook several economic experiments using 54 futures and options traders recruited from the Chicago Board of Trade (CBOT). Haigh was a full time faculty member at the University of Maryland (before joining the CFTC) when the experiments were undertaken. The award presentation was made at the 2004 Financial Management Association's (FMA) Annual Meeting in New Orleans on October 7th 2004.

Specifically, their experiments attempted to address the question whether professional traders act differently (and more in line with standard economic theory) than ordinary individuals. One of their numerous experiments at the CBOT attempted to investigate whether professional derivative traders tended to be more or less influenced by others decision making, specifically whether traders 'go with the herd' or use their own private information, and hence join in what is known as an 'information cascade'.

Results presented in the award winning paper entitled, Information Cascades: Evidence from a Field Experiment with Financial Market Professionals, suggest that professional traders do indeed think and act differently than ordinary subjects in numerous and interesting ways. The views expressed in this paper are those of the authors and do not, in any way, reflect the views or opinions of the CFTC.

For further information, please contact Michael S. Haigh, (202) 418-5063 or [email protected].

Last Updated: May 1, 2007