IDEAS home Printed from https://ideas.repec.org/a/eee/beexfi/v49y2026ics2214635026000092.html

Bonus structures and bubble formation in experimental asset markets

Author

Listed:
  • Wang, Xiaohui
  • Funaki, Yukihiko

Abstract

In this study, we examine how different tournament-style bonus structures influence asset bubbles in experimental markets. We compare two structures: one that rewards a broad group of traders (“Bonus for Most”) and another that rewards only a few top performers (“Bonus for Few”). The findings indicate that the Bonus for Most structure is more likely to exacerbate bubble formation when traders gain experience. Under this structure, traders are more inclined to buy overpriced assets, not to improve long-term performance, but to boost short-term portfolio values and increase their chances of earning a bonus. This behavior, referred to as strategic asset accumulation, is less common under Bonus for Few, which offers lower opportunities for such manipulation-driven rewards. These findings demonstrate how short-term tournament incentives can unintentionally amplify price distortions, underscoring the importance of thoughtful incentive design in supporting market efficiency and stability.

Suggested Citation

  • Wang, Xiaohui & Funaki, Yukihiko, 2026. "Bonus structures and bubble formation in experimental asset markets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:beexfi:v:49:y:2026:i:c:s2214635026000092
    DOI: 10.1016/j.jbef.2026.101147
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2214635026000092
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.jbef.2026.101147?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:beexfi:v:49:y:2026:i:c:s2214635026000092. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-behavioral-and-experimental-finance .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.