The effect of favorable and unfavorable information on asset prices

Charles Noussair, Steven Tucker and Mark Ryan

Chapter 17 in Handbook of Experimental Finance, 2022, pp 194-212 from Edward Elgar Publishing

Abstract: We study experimental markets in which the fundamental value is subject to changes from the arrival of new information. Participants trade in a sequence of three markets, which allows the effect of experience with both positive and negative information to be studied. The results reveal asymmetries in the speed of price discovery; there is more underreaction to positive than to negative information. Both cognitive ability, as captured in the CRT test, and understanding of the fundamental value process, as measured with comprehension quizzes administered after each market, are determinants of individual earnings. Price bubbles in markets with high cash to asset ratios do not dissipate with experience, even when the fundamental value trajectory is constant over time.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/view/edcoll/9781800372337/9781800372337.00024.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

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: https://EconPapers.repec.org/RePEc:elg:eechap:20035_17

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().