Two Heads Are Less Bubbly than One: Team Decision-Making in an Experimental Asset Market

Stephen Cheung and Stefan Palan ()
Additional contact information
Stefan Palan: University of Graz

No 4507, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: We study the effect of team decision-making on bubbles and crashes in experimental asset markets of the kind introduced by Smith, Suchanek and Williams (1988). We find that populating such markets with teams of size two instead of individuals significantly reduces the severity of mispricing. In particular we observe that under our teams treatment, deviations in prices away from intrinsic value are significantly smaller in magnitude, shorter in duration and associated with lower volume and price volatility. We also find an unexpected gender effect in team composition, manifesting itself in more extreme – though not consistently more profitable – behaviour by all-male teams. Since these effects are not observed among male participants generally, we conjecture that they may be due to factors specific to the psychology of decision-making in male-dominated environments.

Keywords: asset market experiments; price bubbles; group decision-making; gender composition of teams (search for similar items in EconPapers)
JEL-codes: C92 D70 G12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-mic
Date: 2009-10

Downloads: (external link)
http://ftp.iza.org/dp4507.pdf (application/pdf)

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:iza:izadps:dp4507

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute for the Study of Labor (IZA)
Address: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Contact information at EDIRC.
Series data maintained by Mark Fallak ().