Soft Landing of a Stock Market Bubble, An Experimental Study
Urs Fischbacher and
No 90, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich
The paper investigates the effect of interest policy on price bubbles, trading behavior and portfolio choice in experimental stock markets. A series of experiments has 8 participants trade an asset over 15 periods. Alternatively, the participants can invest money in interest-bearing bonds. Treatment groups are subjected to an endogenous interest policy, while control groups experience a constant interest rate. Our stock markets are characterized by bubbles. While we observe a small positive impact of our interest policy on bubbles, the policy also strongly increases market volatility. On the other hand, concerning portfolio choice, we find evidence for value-driven (rational) investment behavior.
Keywords: experimental asset markets; stock market bubbles; interest rate policy (search for similar items in EconPapers)
JEL-codes: E52 G12 C92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:090
Access Statistics for this paper
More papers in IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich Contact information at EDIRC.
Bibliographic data for series maintained by Marita Kieser (). This e-mail address is bad, please contact .