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This is the first paper to analyze and confirm the existence and extent of rational informational herding and rational informational contrarianism in a financial market experiment, and to compare and contrast these with the equivalent irrational phenomena. In the authors? paper, subjects generally behave according to benchmark rationality. Traders who should herd or be contrarian in theory are the significant source of both within the data. Correcting for subjects who chose not to trade at least once (an irrational action in itself), increases the ability to predict herding or contrarian behavior considerably.
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