Communications in Financial Markets: a Strategy method Experiment

Brice Corgnet and Angela Sutan

No 06/07, Faculty Working Papers from School of Economics and Business Administration, University of Navarra

Abstract: The main objective of this paper is to analyze the impact of uninformative communications on asset prices. An experimental approach allows us to control for the release of a priori uninformative messages. We introduce the release of messages in standard experimental asset markets with bubbles using a strategy method experiment. We conjecture that messages that are a priori uninformative can significantly impact the level of asset prices. Such communications may be used by boundedly rational subjects to compute the fundamental value of the asset. In addition, rational agents may anticipate such an effect and adapt their strategy to the messages received. We asked 182 subjects to construct strategies about their action in a standard experimental asset market environment. Our analysis sheds light on the possibility of manipulation and stabilization of financial markets by influential agents such as financial gurus or central bankers.

Keywords: asset markets; bubbles; market communications; traders bounded rationality; strategy method experime (search for similar items in EconPapers)
JEL-codes: C92 G12 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2007-08-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.unav.edu/documents/10174/6546776/1188406798_WP1_Brice.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.unav.edu/documents/10174/6546776/1188406798_WP1_Brice.pdf [301 Moved Permanently]--> https://www.unav.edu/documents/10174/6546776/1188406798_WP1_Brice.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:una:unccee:wp0607

Access Statistics for this paper

More papers in Faculty Working Papers from School of Economics and Business Administration, University of Navarra
Bibliographic data for series maintained by ().