Bubbles and Information: An Experiment

Matthias Sutter, Jürgen Huber and Michael Kirchler
Additional contact information
Jürgen Huber: Department of Banking and Finance, University of Innsbruck, A-6020 Innsbruck, Austria

Management Science, 2012, vol. 58, issue 2, 384-393

Abstract: A symmetric distribution of information, although omnipresent in real markets, is rarely considered in experimental economics. We study whether information about imminent future dividends can abate bubbles in experimental asset markets. We find that markets with asymmetrically informed traders have significantly smaller bubbles than markets with symmetrically informed or uninformed traders. Hence, fundamental values are better reflected in market prices--implying higher market efficiency--when some traders know more than others about future dividends. This suggests that bubbles are abated when traders know that a subset of them have an edge (in information) over others. This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.

Keywords: finance; experiment; bubbles (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.1110.1365 (application/pdf)

Related works:
Working Paper: Bubbles and information: An experiment (2008)
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:inm:ormnsc:v:58:y:2012:i:2:p:384-393

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().