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Tournament incentives and asset price bubbles: Evidence from a field experiment

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  • Berlemann, Michael
  • Vöpel, Henning

Abstract

In this note we show at the example of an experimental stock market, conducted on the occasion of the World Soccer Championship 2010 in South Africa, how tournament incentives might contribute to the formation of asset price bubbles.

Suggested Citation

  • Berlemann, Michael & Vöpel, Henning, 2012. "Tournament incentives and asset price bubbles: Evidence from a field experiment," Economics Letters, Elsevier, vol. 115(2), pages 232-235.
    • Handle: RePEc:eee:ecolet:v:115:y:2012:i:2:p:232-235
    DOI: 10.1016/j.econlet.2011.12.043
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    References listed on IDEAS

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    1. R. Mark Isaac & Duncan James, 2000. "Asset Markets: How They Are Affected by Tournament Incentives for Individuals," American Economic Review, American Economic Association, vol. 90(4), pages 995-1004, September.
    2. Robert W. Hahn & Paul Tetlock, 2006. "Information Markets: A New Way of Making Decisions," Books, American Enterprise Institute, number 51409, September.
    3. Forsythe, Robert & Forrest Nelson & George R. Neumann & Jack Wright, 1992. "Anatomy of an Experimental Political Stock Market," American Economic Review, American Economic Association, vol. 82(5), pages 1142-1161, December.
    4. Forsythe, Robert & Rietz, Thomas A. & Ross, Thomas W., 1999. "Wishes, expectations and actions: a survey on price formation in election stock markets," Journal of Economic Behavior & Organization, Elsevier, vol. 39(1), pages 83-110, May.
    5. Kenneth Oliven & Thomas A. Rietz, 2004. "Suckers Are Born but Markets Are Made: Individual Rationality, Arbitrage, and Market Efficiency on an Electronic Futures Market," Management Science, INFORMS, vol. 50(3), pages 336-351, March.
    6. R. Mark Isaac & Duncan James, 2003. "Boundaries of the Tournament Pricing Effect in Asset Markets: Evidence from Experimental Markets," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 936-951, April.
    7. Brown, Keith C & Harlow, W V & Starks, Laura T, 1996. "Of Tournaments and Temptations: An Analysis of Managerial Incentives in the Mutual Fund Industry," Journal of Finance, American Finance Association, vol. 51(1), pages 85-110, March.
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    Cited by:

    1. Yang, Xiaolan & Gao, Mei & Wu, Yun & Jin, Xuejun, 2018. "Performance evaluation and herd behavior in a laboratory financial market," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 75(C), pages 45-54.

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    More about this item

    Keywords

    Experimental stock markets; Speculative bubble; Communication; Tournament incentives;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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