Design-features of bubble-prone experimental asset markets with a constant FV

Christoph Huber, Parampreet C. Bindra and Daniel Kleinlercher
Additional contact information
Parampreet C. Bindra: University of Innsbruck
Daniel Kleinlercher: University of Innsbruck

Journal of the Economic Science Association, 2019, vol. 5, issue 2, No 5, 197-209

Abstract: Abstract Experimental asset markets with a constant fundamental value ($$\mathrm {\textsc {fv}}$$FV) have grown in importance in recent years. A methodological examination of the robustness of experimental results in such a setting which has been shown to produce bubbles, however, is lacking. In a laboratory experiment with 280 subjects, we investigate whether specific design features are sufficient to influence experimental results. In detail, we (1) vary the visual representation of the price chart, and (2) provide subjects with full information about the FV process. We find overvaluation and bubble formation to be reduced when trading prices are displayed at the upper end of the price chart. Surprisingly, we do not find any effects when subjects have full information about the FV process.

Keywords: Experimental finance; Asset markets; Price efficiency; Bubbles; Experimental design (search for similar items in EconPapers)
JEL-codes: C92 D84 G02 G12 G14 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s40881-019-00061-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jesaex:v:5:y:2019:i:2:d:10.1007_s40881-019-00061-5

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/40881

DOI: 10.1007/s40881-019-00061-5

Access Statistics for this article

Journal of the Economic Science Association is currently edited by Nikos Nikiforakis and Robert Slonim

More articles in Journal of the Economic Science Association from Springer, Economic Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().