An Experimental Study of Bubble Formation in Asset Markets Using the Tâtonnement Pricing Mechanism
Volodymyr Lugovskyy (),
Daniela Puzzello () and
Steven Tucker ()
Working Papers in Economics from University of Canterbury, Department of Economics and Finance
We report the results of an experiment designed to study the role of institutional structure in the formation of bubbles and crashes in laboratory asset markets. In a setting employing double auctions and call markets as trading institutions, bubbles and crashes are a quite robust phenomenon. The only factor appearing to reduce bubbles is experience across markets. In this study, we employ the tâtonnement trading institution, which has not been previously explored in laboratory asset markets. The results show that bubbles are eliminated, suggesting that the trading institution plays a crucial role in the formation of bubbles.
Keywords: Bubbles; Trading Institutions; Pricing Mechanisms; Tâtonnement (search for similar items in EconPapers)
JEL-codes: C91 (search for similar items in EconPapers)
Pages: 34 pages
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:09/19
Access Statistics for this paper
More papers in Working Papers in Economics from University of Canterbury, Department of Economics and Finance Private Bag 4800, Christchurch, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by Albert Yee ().