Stock Market Game Research Articles

Lessons drawn from a stock market game

A new approach in educational science promotes student involvement to replace frontal lectures. The objective is to create a cooperative environment in class applying the new educational techniques. Gamification is one effective solution to the problem. I used the stock market game described here to introduce my students to the world of trading systems and the basic rules of financial behaviour in a playful but challenging environment. After the introduction and a description of the literature used, this paper describes how the game is played. I have been playing the game in the same order for years, which has had a dual advantage. On the one hand, based on practical experience, introducing new skills and knowledge is best done in an established order both for the fluency of the game and the effective processing of the new knowledge. On the other hand, the identical order of playing the games is important for subsequent statistical analysis and drawing the conclusions. The analysis in the paper has been made using a simple statistical descriptive methodology. By their multiplicity, the 136 teams in the sample would have been sufficient to use deductive methodology, however, the participating students belonged to different groups (undergraduate and post-graduate, reading economics, reading other subjects), so the number of the individual teams has become lower. Also, if you look at the number of individual games, i.e. the 34-component sample, deductive statistics will produce more limited results. It has become clear from the results so far that post-graduate students, particularly those reading non-economics subjects, were more prone to making emotional rather than rational decisions during the course of the game. Psychological elements had a more emphatic impact on their decisions compared to their peers who had a profound knowledge of economics.

Cooperative Stock Market Game

This study explores the game-theoretic model of the stock market, analyzing the behavior and strategic choices of market participants, and constructing a cooperative game model. The basic concepts of game theory are introduced, and the importance and practical application of game theory in the stock market are explained. A cooperative game-theoretic model is constructed, the characteristic function is established, and its superadditivity is proven. The model is analyzed, the Shapley value is derived. It is demonstrated that the Shapley value belongs to the core.

Impact of gamification on mitigating behavioral biases of investors

We investigate whether gamification can help mitigate behavioral biases of investors by conducting a unique stock market experiment that is free from observer-expectancy and subject-expectancy effects. Utilizing the trading data of investors who simultaneously have active portfolios in an investment firm and stock market simulation game, we show that investors have different biases in real versus simulated settings. We find that participating in a stock market game affects all biases differently, with different degrees of participation to the game. While overconfidence bias and disposition effect can be mitigated and decrease with more active participation in the game, familiarity and status quo biases increase. We also show that young, inexperienced investors with average-sized portfolios and men are more likely to participate. These findings will especially be of interest to researchers, financial institutions and governmental bodies that plan to conduct similar experiments and design services promoting better financial decision-making and investment behavior.

Forecasting Prices of Shares Listed on the Warsaw Stock Exchange Using Machine Learning

Abstract Objective: The technology developing before our eyes is entering many areas of life and has an increasing influence on shaping human behavior. Undoubtedly, it can be stated that one such area is trading on stock exchanges and other markets that offer investors the opportunity to allocate their capital. Thanks to widespread access to the Internet and the computing capabilities of computers used in the daily activities of investors, the nature of their working has changed significantly, compared to what we observed even 10–15 years ago. At present, stock exchange orders may be placed in person using various types of brokerage investment accounts, which allow the investor to view real-time quotations which opens up a whole new range of opportunities for investorsIts skillful application during the stock market game can positively influence a player’s investment performance.Machine learning is a branch of artificial intelligence and computer science that focuses on using data and algorithms to solve decision-making problems based on large amounts of information. In machine learning, algorithms find patterns and relationships in large data sets and make the best decisions and predictions based on this analysis. Methodology: The main objective of this paper is to investigate and evaluate the applicability of machine learning for investment decisions in equity markets. The analysis undertaken focuses on so-called day-trading, i.e. investing for very short periods of time, often involving only a single trading session. The hypothesis adopted is that the use of machine learning can contribute to a positive return for a stock market player making short-term investments. Findings: This paper uses the Azure Microsoft Machine Learning Studio tool to enable machine learning-based calculations. It is a widely available cloud computing platform that provides an investor interested in creating a model and testing it. The calculations were made according to two schemes. The first involves teaching the model by taking 50% of the companies randomly selected from all companies, while the second involves teaching the model by taking 80% of the companies randomly selected from all companies. Value Added: The results from the study indicate that investors can use machine learning to earn returns that are attractive to them. Depending on the teaching model (50% or 80% companies), daily returns can range from 1.07% to even 4.23%. Recommendations: The results obtained offer investors the prospect of using the method presented in the article in their capital management strategies, which of course requires them to adapt the techniques used so far to the specifics of machine learning. However, it is necessary to note that the presented method requires that each time the data on which the forecast was made be updated..Further research is needed to determine the impact of the number of companies on the effectiveness of the learning process.

Of deadly beans and risky stocks: Political ideology and attitude formation via exploration depend on the nature of the attitude stimuli.

An attitude formation task examined how conservatives and liberals explore information about novel stimuli and form attitudes towards them. When framed as the BeanFest game, conservatives sampled fewer beans and exhibited a stronger learning asymmetry (i.e., better learning for negative than positive beans) than liberals. This has been taken as strong evidence that conservatives are more sensitive to negative stimuli than liberals. We argue that the learning asymmetry and sampling bias by conservatives is due to framing of the game. In addition to the BeanFest, we framed the game as StockFest (i.e., a stock market game) where participants learned about novel stocks. We replicated the pronounced learning asymmetry for conservatives in the BeanFest game, but found a pronounced learning asymmetry for liberals in the StockFest game. We suggest that conservatives and liberals are equally sensitive to negative stimuli but in different domains.

Information search in everyday decisions: The generalizability of the attraction search effect

AbstractThe recently proposedintegrated coherence-based decisions and search model(iCodes) makes predictions for search behavior in multi-attribute decision tasks beyond those of classic decision-making heuristics. More precisely, it predicts theAttraction Search Effectthat describes a tendency to search for information for the option that is already attractive given the available evidence. To date, the Attraction Search Effect has been successfully tested using a hypothetical stock-market game that was highly stylized and specifically designed to be highly diagnostic. In three experiments, we tested whether the Attraction Search Effect generalizes to different semantic contexts, different cue-value patterns, and a different presentation format than the classic matrix format. Across all experiments, we find evidence for information-search behavior that matches iCodes’s information-search prediction. Therefore, our results corroborate not only the generalizability of the Attraction Search Effect in various contexts but also the inherent process assumptions of iCodes.

Students and Stocks: A Critical Reading of the Stock Market Game™

According to the Securities Industry and Financial Markets Association, which sponsors the Stock Market Game (SMG), more than 600,000 students participate in the SMG each year. The rationale for the game’s inclusion in the school curriculum generally focuses on the positive contributions the game is thought to provide with respect to students’ understanding of financial markets, financial literacy, and other academic learning. In this article, I contrast this generally positive view of the SMG with more critical perspectives informed by the work of Lauren Willis, Chris Clarke, and Chris Arthur, who share the view that efforts to educate students about financial markets, while potentially helpful, can also be problematic because of their individualistic and consumerist focus. My analysis seeks to uncover the political orientation of the SMG as well as its “latent ideological content” by examining some basic questions such as (1) What is included in the curriculum and what is left out? (2) Whose interests does the knowledge included within the curriculum serve? (3) To what degree does the transmission, organization, and interpretation of the knowledge included distort or reflect aspects of reality (Apple, 2013, p. 23). I conclude the article with a discussion of the ways in which educators might “trouble” or challenge ideological content embedded within the curriculum of the SMG.

Brain Activity Follow Up of Stock Market Financial Variables

Efficiency Market hypothesis assume that all investors reason in the same way to make their financial decisions. In contrast, Neurosciences have provided strong evidences that cognitive diversity is the hallmark of human intelligence. Neurofinances has shown that volunteers learned different profitable financial decision-making strategies depending on the kind of market they begun to trade. Here, we decide to further explore this hypothesis by studying a possible correlation between brain activity and the financial variables in a stock market game and to test if this correlation differ between experimental groups that trade in different market conditions. Present results show that volunteers had different perceptions of the studied financial variables depending if they initially traded in a bear or a bull market. Our findings are consistent with the hypothesis that different neural circuits were learned to monitor the different financial variables studied here, depending on market conditions.

Social framing effects: Preferences or beliefs?

In an otherwise neutrally described Prisonersʼ dilemma experiment, we document that behavior is more likely to be cooperative when the game is called the Community Game than when it is called the Stock Market Game. However, the difference vanishes when only one of the subjects is in control of her action. The social framing effect also vanishes when the game is played sequentially. These findings are inconsistent with the hypothesis that the Community label triggers a desire to cooperate, but consistent with the hypothesis that social frames are coordination devices. More generally, our evidence indicates that social frames enter peopleʼs beliefs rather than their preferences.

Equilibrium and stability of a stock market game with big traders

This paper addresses a stochastic differential game arising in a stock market largely controlled by big traders. We model stock price behaviour as a standard geometric Brownian motion and the stock market as characterized by the presence of a few large traders and a fringe of marginal “noise traders”. Using the concept of Nash equilibrium we compute the equilibrium strategies and optimal value functions for the large traders. We also establish the stability of the state process under equilibrium strategies of the large traders. Finally we illustrate our results through some numerical examples for each variation of our model.

Faculty practices in undergraduate investments courses

PurposeThe purpose of this paper is to examine the practices of professors teaching the introductory class in investments.Design/methodology/approachA sample of 101 syllabi of the first investments course taught in various AACSB accredited business schools around the country was collected. Several dimensions of course content are summarized: the primary textbook selections, other required and recommended materials including the use of spreadsheets, financial calculators, financial magazines such as the Wall Street Journal (WSJ), and/or stock market games, grading policies including assessment components and their weights, and course contents based on various investments topics.FindingsClassroom practices of investments professors differ considerably. There is virtually nothing that is universally applied by investments faculty. There are, however, many areas such as key content to include in the course where a large majority tends to agree with each other.Originality/valueWhile there is obviously not a single right way to teach investments, many professors may be able to improve their classes or their assessment methods by trying some of the things that others are doing. Including stock market games, for example, might enlighten the students and encourage more classroom discussion.

A model of finite-step random walk with absorbent boundaries

This paper proposes a model of finite-step lattice random walk with absorbent boundaries. We address a problem of optimal stop for this model, which is defined as the absorbent boundary value with maximum profit. Compared with many existing optimal stop investigations in the random process, our study only considers the small-sample behaviour (i.e., small number of steps behaviour) and does not consider the limit behaviour of the walk. The optimal stop time is given based on classical probability computation. Since the small-sample is more practical and common than the large-sample in many real world problems, the result obtained in this paper may provide some useful guidelines for real applications associated with the finite-step random walk such as the stock market and gambling games.

Cross-cultural overconfidence and biased self-attribution

We use a stock-market game and predictions of examination marks to examine differences between overconfidence and biased self-attribution (BSA) of British and Asian students. Although different overconfidence measures show little correlation, Asians are consistently more overconfident than the British. All are equally prone to BSA.

Financial Literacy: If It's so Important, Why isn't It Improving?

Financial literacy has assumed greater importance in our society as the result of the increasing complexity of financial products and the simultaneous cutting of economic safety nets by government, employers and even parents who worry about their own retirements. If the problem isn't solved and consumers don't look out for themselves, they may exercise a put option by throwing themselves on the mercy of taxpayers when they cannot support themselves in retirement. In addition, a lack of financial literacy may contribute to seemingly irrational behavior that distorts financial markets. Measured financial literacy scores among high school seniors is low and has even declined since 1997. More distressing is the fact that students who take a course in personal finance end up no more financially literate than those who don't. Tracking students who took such a course over a 5 year period shows no positive impact on financial literacy, attitudes toward thrift or behavior. The only bright spot is the stock market game which consistently increases literacy scores, indicating that teaching should be interactive, contemporary and fun. About the Author: From 1998 to 2001, Dr. Mandell served as dean of the School of Management, leading a successful effort to improve the school's national and regional reputation, as well as its educational facilities. In 2004, he was named Teacher of the Year by the Undergraduate Management Association. Previously he served as dean of the School of Business at Marquette University.

Adaptive flexibility and maladaptive routines in selecting fast and frugal decision strategies.

Decision routines unburden the cognitive capacity of the decision maker. In changing environments, however, routines may become maladaptive. In 2 experiments with a hypothetical stock market game (n = 241), the authors tested whether decision routines tend to persist at the level of decision strategies rather than at the level of options in strategy selection. The payoff structure of the task was changed after 80 decision trials, rendering a new strategy optimal with respect to expected payoff. Whereas most participants detected the appropriate strategy at the beginning of the task, they tended to retain it even when it was no longer optimal. A hint about a possible change had only a small influence on this maladaptive routine; a monetary incentive had none. Switching to a similar but not identical task relaxed the routine, but not much.

A Critical Review of Learning from the Market: Integrating The Stock Market Game across the Curriculum

Learning from the Market: Integrating The Stock Market Game across the Curriculum is a guide for teachers of economics, mathematics, social studies, and language arts in grades 4 to 12. The author believes that Learning from the Market suffers from errors of fact and omission that seriously detract from its usefulness as a guide to the stock market and the economy. He suggests corrections and alternative activities that will enable instructors to continue to use the guide in conjunction with ever-popular stock market simulations.

Economics in the pre-college curricluum

This study analyzes the effects of integrating economics into the social studies curriculum and the effects of participation in the Stock Market Game (SMG) on the Maryland School Performance Assessment Program (MSPAP) economics outcome scores. The study was carried out using state summary and disaggregated data and summary data for each school system in Maryland. The 1992 and 1994 MSPAP economics outcome scores for grades 3, 5, and 8 constituted the dependent variable with the level of integration of economics in the curriculum and the level of participation in the SMG being the main explanatory variables. Using comparative static analysis, two related but separate questions were addressed. The first question asks how school systems with different levels of integration of economics in the curriculum and with different levels of participation in the SMG compare to the state average. The second question asks how these groupings compare to each other. It is this second question that lends itself to more rigorous hypothesis testing.

Risk-Adjusted Returns and Stock Market Games

The integration of risk into the Stock Market Game is illustrated. The authors demonstrate how rewarding the participants for scoring well on a risk-adjusted basis, as well as the winner based on largest profits, is a means to bring portfolio diversification into the game.

Risk-Adjusted Returns and Stock Market Games

Risk-Adjusted Returns and Stock Market Games

A Noncomputerized Version of the Williams and Walker Stock Market Experiment in a Finance Course

The author describes a trading game used to teach asset valuation to upper-division finance students. As in the Williams and Walker stock market game, students must devise bid strategies for an asset, but management of the exercuse does not require a computer.