From Gambling to Gaming: The Crowding Out Effect

This paper investigates how noise trading behavior is influenced by limited attention. As the daily price limit rules of the Chinese stock market provide a scenario for the exhibition of salient payoffs, speculators elevate prices to attract noise traders into the market. Utilizing a series of distraction events stemming from mobile games as exogenous shocks, we obtain statistical evi-dence that the gambler-like behavior, termed as "Hitting game" may be crowded out. Consistent with our attention mechanism, indicators such as trading volume decline in response to these game shocks.