TY - JOUR
T1 - From Reddit to Wall Street: the role of committed minorities in financial collective action
AU - Lucchini, Lorenzo
AU - Aiello, Luca Maria
AU - Alessandretti, Laura
AU - De Francisci Morales, Gianmarco
AU - Starnini, Michele
AU - Baronchelli, Andrea
N1 - Lucchini, L., Aiello, L. M., Alessandretti, L., De Francisci Morales, G., Starnini, M., & Baronchelli, A. (2022). From Reddit to Wall Street: the role of committed minorities in financial collective action. Royal Society Open Science, 9(4), 211488.
PY - 2022/4/6
Y1 - 2022/4/6
N2 - In January 2021, retail investors coordinated on Reddit to target short-selling activity by hedge funds on GameStop shares, causing a surge in the share price and triggering significant losses for the funds involved. Such an effective collective action was unprecedented in finance, and its dynamics remain unclear. Here, we analyse Reddit and financial data and rationalize the events based on recent findings describing how a small fraction of committed individuals may trigger behavioural cascades. First, we operationalize the concept of individual commitment in financial discussions. Second, we show that the increase of commitment within Reddit pre-dated the initial surge in price. Third, we reveal that initial committed users occupied a central position in the network of Reddit conversations. Finally, we show that the social identity of the broader Reddit community grew as the collective action unfolded. These findings shed light on financial collective action, as several observers anticipate it will grow in importance.
AB - In January 2021, retail investors coordinated on Reddit to target short-selling activity by hedge funds on GameStop shares, causing a surge in the share price and triggering significant losses for the funds involved. Such an effective collective action was unprecedented in finance, and its dynamics remain unclear. Here, we analyse Reddit and financial data and rationalize the events based on recent findings describing how a small fraction of committed individuals may trigger behavioural cascades. First, we operationalize the concept of individual commitment in financial discussions. Second, we show that the increase of commitment within Reddit pre-dated the initial surge in price. Third, we reveal that initial committed users occupied a central position in the network of Reddit conversations. Finally, we show that the social identity of the broader Reddit community grew as the collective action unfolded. These findings shed light on financial collective action, as several observers anticipate it will grow in importance.
KW - reddit
KW - wallstreetbets
KW - gme
KW - committed minorities
U2 - https://doi.org/10.1098/rsos.211488
DO - https://doi.org/10.1098/rsos.211488
M3 - Journal article
SN - 2054-5703
VL - 9
SP - 1
EP - 12
JO - Royal Society Open Science
JF - Royal Society Open Science
IS - 4
M1 - 211488
ER -