Cash Inflows and Bubbles in Asset Markets with Constant Fundamental Values

Charles Noussair and Steven Tucker

Working Papers in Economics from University of Waikato

Abstract: Kirchler et al. (2012) make a number of contributions to experimental research on asset markets. One of their findings is that the levels of cash holdings of traders do not affect asset prices when fundamentals follow a constant time trajectory. We report a new experiment in which we replicate their findings for the specific cash levels they use. However, a new treatment is also included, in which cash holdings are at high levels early in the life of the asset. In this treatment, overpricing and market bubbles are observed, indicating that greater cash levels are indeed associated with higher prices, even when fundamental values are constant over time.

Keywords: experimental asset markets; bubbles (search for similar items in EconPapers)
JEL-codes: C90 D03 G02 G12 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2014-02-13
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 (11)

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https://repec.its.waikato.ac.nz/wai/econwp/1403.pdf (application/pdf)

Related works:
Journal Article: CASH INFLOWS AND BUBBLES IN ASSET MARKETS WITH CONSTANT FUNDAMENTAL VALUES (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wai:econwp:14/03

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