Experience Does not Eliminate Bubbles: Experimental Evidence
Journal
The Review of Financial Studies
Series
School of Finance Working Paper Series
ISSN
0893-9454
Type
journal article
Date Issued
2021-09-01
Author(s)
Abstract
We study the role of investor experience in the formation of asset price bubbles.We conduct a call market experiment in which participants trade assets with each other and a learning-to-forecast experiment in which participants only forecast future prices (while trade based on these forecasts is computerized). Each experiment comprises three treatments varying the information that participants receive about the fundamental value. Each experimental market is repeated three times. Throughout, we observe sizable bubbles that persist despite participant experience. Our findings in the call market experiment contrast with those in the literature. Our findings in the learning-to-forecast experiment are novel.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Publisher
Oxford Univ. Press
Volume
34
Number
9
Start page
4450
End page
4485
Pages
36
Subject(s)
Contact Email Address
matthias.weber@unisg.ch
Eprints ID
255310
File(s)![Thumbnail Image]()
Name
K-P_W RFS 2020 Bubbles Experience with online appendix.pdf
Size
1.53 MB
Format
Adobe PDF
Checksum (MD5)
b9ff7dc58f496b95fed7e47fe1523a61