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

Andreas H\"usler, Didier Sornette and Cars Hommes

Papers from arXiv.org

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.

Date: 2012-05
New Economics Papers: this item is included in nep-exp
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Related works:
Journal Article: Super-exponential bubbles in lab experiments: Evidence for anchoring over-optimistic expectations on price (2013)
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:arx:papers:1205.0635

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