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Emotional State and Market Behavior
Social Science Research Network
We consider the relationship between the emotional state of asset traders and market prices. We create experimental asset markets with the structure first studied by Smith, Suchanek and Williams (1988) , which is known to generate price bubbles and crashes. We analyze participants' facial expressions with facereading software before and while the market is operating. We find that greater positive emotion in facial expressions before the market opens predicts higher prices and larger bubbles.doi:10.2139/ssrn.2276905 fatcat:ko2vrcfkivbibaw2r6xtqw6vba