 The effect of reliability, content and timing of public announcements on asset trading behaviorBrice Corgnet, Praveen Kujal and David Porter Post-Print from HAL Abstract: Financial markets are overwhelmed by daily announcements. We use experimental asset markets to assess the impact of releasing public messages with different levels of reliability on asset prices. Subjects receive qualitative announcements in predetermined trading periods that are either preset by the experimenter, randomly selected, or determined by past asset market prices. We find that messages can play a significant role in bubble abatement, or rekindling. The preset message, "The price is too high," decreases the amplitude and duration of bubbles for inexperienced subjects. Announcements that depend on the actual level of mispricing reduce bubble magnitude. Meanwhile, a preset or random message, "The price is too low," prevents experienced subjects from abating bubbles. We account for the effect of public messages by showing that they significantly reduce inconsistent ("irrational") trading behavior. Keywords: Experimental asset markets; Bubbles; Market communications; Bounded rationality (search for similar items in EconPapers) Published in Journal of Economic Behavior & Organization, 2010, 76 (2), 254-266 p. ⟨10.1016/j.jebo.2010.06.014⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02311959 DOI: 10.1016/j.jebo.2010.06.014 Access Statistics for this paper More papers in Post-Print from HAL |
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