Experience Does not Eliminate Bubbles: Experimental Evidence

Anita Kopányi-Peuker and Matthias Weber

No ecj7q, SocArXiv from Center for Open Science

Abstract: We study the role of experience in the formation of asset price bubbles. Therefore, we conduct two related experiments. One is a call market experiment in which participants trade assets with each other. The other is a learning-to-forecast experiment in which participants only forecast future prices, while the trade, which is based on these forecasts, is computerized. Each experiment comprises three treatments that vary the amount of information about the fundamental value that participants receive. Each market is repeated three times. In both experiments and in all treatments, we observe sizable bubbles. These bubbles do not disappear with experience. Our findings in the call market experiment stand in contrast to the literature. Our findings in the learning- to-forecast experiment are novel. Interestingly, the shape of the bubbles is different between the two experiments. We observe flat bubbles in the call market experiment and boom-and-bust cycles in the learning-to-forecast experiment.

Date: 2018-12-04
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 (2)

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https://osf.io/download/5c06416f65e9650018de7994/

Related works:
Journal Article: Experience Does Not Eliminate Bubbles: Experimental Evidence (2021)
Working Paper: Experience Does not Eliminate Bubbles: Experimental Evidence (2018)
Working Paper: Experience Does not Eliminate Bubbles: Experimental Evidence (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:ecj7q

DOI: 10.31219/osf.io/ecj7q

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