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Biases in scholarly recommender systems: impact, prevalence, and mitigation

Färber, Michael ORCID iD icon 1; Coutinho, Melissa 1; Yuan, Shuzhou 1
1 Institut für Angewandte Informatik und Formale Beschreibungsverfahren (AIFB), Karlsruher Institut für Technologie (KIT)

Abstract:

We create a simulated financial market and examine the effect of different levels of active and passive investment on fundamental market efficiency. In our simulated market, active, passive, and random investors interact with each other through issuing orders. Active and passive investors select their portfolio weights by optimizing Markowitz-based utility functions. We find that higher fractions of active investment within a market lead to an increased fundamental market efficiency. The marginal increase in fundamental market efficiency per additional active investor is lower in markets with higher levels of active investment. Furthermore, we find that a large fraction of passive investors within a market may facilitate technical price bubbles, resulting in market failure. By examining the effect of specific parameters on market outcomes, we find that that lower transaction costs, lower individual forecasting errors of active investors, and less restrictive portfolio constraints tend to increase fundamental market efficiency in the market.


Verlagsausgabe §
DOI: 10.5445/IR/1000157400
Veröffentlicht am 17.04.2023
Originalveröffentlichung
DOI: 10.1007/s11192-023-04636-2
Scopus
Zitationen: 1
Dimensions
Zitationen: 1
Cover der Publikation
Zugehörige Institution(en) am KIT Institut für Angewandte Informatik und Formale Beschreibungsverfahren (AIFB)
Publikationstyp Zeitschriftenaufsatz
Publikationsjahr 2023
Sprache Englisch
Identifikator ISSN: 0138-9130, 1588-2861
KITopen-ID: 1000157400
Erschienen in Scientometrics
Verlag Springer Verlag
Band 128
Seiten 2703–2736
Vorab online veröffentlicht am 21.03.2023
Nachgewiesen in Web of Science
Dimensions
Scopus
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