Template-Type:ReDIF-Paper 1.0  
Title: An Options Pricing Experiment with Professional Traders 
Author-Name: Abbink, Klaus
Author-Name: Bettina Kuon  
Classification-JEL: C91, G12, G14
Keywords: 	Option pricing, arbitrage, experiment, professional traders 
Abstract: This paper reports an option pricing experiment on the binomial model, which has been conducted
	with professional traders of financial assets. The experimental results are compared to a corresponding
	experiment with students. The data show that professional traders achieve lower arbitrage exploitation as well
	as lower expected payoffs, as a consequence of significantly lower probability sensitivity. This phenomenon is
	explained by an adaptive process of probability calibration, which is transferred from real financial markets
	without explicit probability distributions. Students without practical experience choose a more analytical
	approach considering the given probabilities to a stronger extent, which leads to higher performance.
Length: pages
Creation-Date: 
Revision-Date: 1998-02
Handle: RePEc:bon:bonsfb:426