We present below recent results from our research in gender and finance.
We use the SimTrade simulation platform freely available on www.simtrade.fr. SimTrade is a tool used to teach and learn finance, and a tool used for research to conduct experiments to better understand the behavior of individuals in terms of financial decisions.
The originality of SimTrade is to propose simulations with a platform to buy and sell stocks. Like traders in a trading room of an investment bank, SimTraders live a full trading day (10 minutes at your watch) with exciting trading opportunities, stock market prices going up and down, positive and negative news announcements about firms and in the economy that have to be interpreted.
To study the gender issue in finance, we build the SunCar simulation. SunCar is a company, which designs, produces and sells low-speed electric vehicles for city use. Due to a severe illness, Jacques Dallara, the CEO, will be relinquishing his operational duties in the near future. During the simulated trading session, at midday, SunCar is expected to announce the name of Jacques Dallara’s successor as head of the group. The two candidates for his replacement are: Anna Farrell and Henri Villa.
For our experiments based on simulations, we have randomized the simulations: when the SimTrader launches the simulation, he or she will play sometimes the simulation where Anna Farrell is nominated to be the next CEO, and sometimes the simulation where Henri Villa is nominated to be the next CEO (the probability of each variant being equal to 50%). This gender-related event allows us to capture the behavior of SimTraders: would you sell, buy or do nothing after the news announcement of the next CEO?
Debriefing of the experiment
What participants did after the news announcement of the new CEO? Was there a difference if a female CEO or a male CEO is appointed? Does this difference depend on the gender of participants (SimTraders)? Their behavior during the simulation is summarized by the table below:
What do we observe? When Anna Farrell – a female CEO – is nominated, female traders react more positively to this news announcement as there are 55% of buyers and 45% of sellers among them. On the opposite, male traders react more negatively to this news announcement as there are 38% of buyers and 62% of sellers. When Henri Villa – a male CEO – is nominated, results are reversed: female traders react more negatively to this news announcement as there are 36% of buyers and 64% of sellers among them. On the opposite, male traders react more positively to this news announcement as there are 62% of buyers and 38% of sellers.