Margin, Short Selling, And Lotteries In Experimental Asset Markets

Lucy F. Ackert (), Narat Charupat (), Bryan K. Church () and Richard Deaves ()
Additional contact information
Narat Charupat: Michael G. DeGroote School of Business, McMaster University
Bryan K. Church: College of Management, Georgia Institute of Technology
Richard Deaves: Michael G. DeGroote School of Business, McMaster University

Southern Economic Journal, 2006, vol. 73, issue 2, pages 419–436

Abstract: The robustness of bubbles and crashes in markets for assets with finite lives is perplexing. This paper reports the results of experimental asset markets in which participants trade two assets. In some markets, price bubbles form. In these markets, traders pay higher prices for the asset with lottery characteristics (i.e., a claim on a large, unlikely payoff). However, institutional design has a significant impact on deviations in prices from fundamental values, particularly for an asset with lottery characteristics. Price run-ups and crashes are moderated when traders finance purchases of the assets themselves and are allowed to short sell.

JEL-codes: C92 G14 (search for similar items in EconPapers)
Date: 2006
View citations in EconPapers

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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: http://EconPapers.repec.org/RePEc:sej:ancoec:v:73:2:y:2006:p:419-436

Access Statistics for this article

Southern Economic Journal is edited by Laura Razzolini

More articles in Southern Economic Journal from Southern Economic Association
Contact information at EDIRC.
Series data maintained by Laura Razzolini ().