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Uninformative announcements and asset trading behavior

Brice Corgnet, Praveen Kujal and Dave Porter

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: Financial markets are overwhelmed by daily announcements. We use experimental asset markets to assess the impact of uninformative communications on asset prices and trading volumes. We deliver uninformative messages in standard experimental asset markets and find that trading volumes and prices are impacted by these messages. In particular, the release of a pre-announced preset message to traders “The price is too high” in predetermined trading periods decreases the amplitude and duration of bubbles. Also, the release of the messages “The price is too high” or “The price is too low” reduces trading volume with inexperienced subjects.

Keywords: Experimental; asset; markets; Bubbles; Market; communications; Bounded; rationality (search for similar items in EconPapers)
JEL-codes: C92 G12 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-exp and nep-mst
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we078350

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