Non-Speculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality Vs. Actual Irrationality

V. Lei, Charles Noussair and C.R. Plott

Purdue University Economics Working Papers from Purdue University, Department of Economics

Abstract: We report the results of an experiment designed to study the role of speculation in the formation of bubbles and crashes in laboratory asset markets. In a setting in which speculation is not possible, bubbles and crashes are observed. The results suggest that the departures from fundamental values are not caused by the lack of common knowledge of rationality leading to speculation, but rather by behavior that itself exhibits elements of rationality.

Keywords: EXPERIMENTS; FINANCIAL MARKET; BUSINESS CYCLES (search for similar items in EconPapers)
JEL-codes: E32 G10 G11 C90 (search for similar items in EconPapers)
Date: 1998-11
References: Add references at CitEc
Citations View citations in EconPapers (5) Track citations by RSS feed

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

Related works:
Journal Article: Nonspeculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality vs. Actual Irrationality (2001)
Working Paper: Non-speculative bubbles in experimental asset markets: Lack of common knowledge of rationality vs. actual irrationality (2001)
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:pur:prukra:1120

Access Statistics for this paper

More papers in Purdue University Economics Working Papers from Purdue University, Department of Economics
Contact information at EDIRC.
Series data maintained by Krannert PHD ().