Super-exponential bubbles in lab experiments: Evidence for anchoring over-optimistic expectations on price

A. Hüsler, D. Sornette and Cars Hommes

Journal of Economic Behavior & Organization, 2013, vol. 92, issue C, 304-316

Abstract: We analyze a controlled price formation experiment in the laboratory that shows evidence for bubbles. We calibrate two models that demonstrate with high statistical significance that these laboratory bubbles have a tendency to grow faster than exponential due to positive feedback. We show that the positive feedback operates by traders continuously upgrading their over-optimistic expectations of future returns based on past prices rather than on realized returns.

Keywords: Anchoring; Financial bubbles; Laboratory experiments; Speculation; Super-exponential growth; Positive feedback (search for similar items in EconPapers)
JEL-codes: C92 D84 G12 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (31)

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Related works:
Working Paper: Super-exponential bubbles in lab experiments: evidence for anchoring over-optimistic expectations on price (2012)
Working Paper: Super-Exponential Bubbles in Lab Experiments: Evidence for Anchoring Over-Optimistic Expectations on Price (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:92:y:2013:i:c:p:304-316

DOI: 10.1016/j.jebo.2013.06.005

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