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Price bubbles, gender, and expectations in experimental asset markets

Author

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  • Holt, Charles A.
  • Porzio, Megan
  • Song, Michelle Yingze

Abstract

This paper reports results of laboratory markets for a risky asset with a “flat” fundamental value that equates expected dividends to the return on a safe asset. Subjects were sorted by gender in an unobtrusive manner, and bubbles in this setting are pervasive and of comparable magnitude for both genders. In contrast, a robustness check done with a declining fundamental value did generate larger bubbles for groups of males. Elicited price forecasts tend to trail share prices as they rise and exceed prices as they fall, a pattern that is tracked by a “double adaptive” forecasting model.

Suggested Citation

  • Holt, Charles A. & Porzio, Megan & Song, Michelle Yingze, 2017. "Price bubbles, gender, and expectations in experimental asset markets," European Economic Review, Elsevier, vol. 100(C), pages 72-94.
  • Handle: RePEc:eee:eecrev:v:100:y:2017:i:c:p:72-94
    DOI: 10.1016/j.euroecorev.2017.05.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Butler, David & Cheung, Stephen L., 2018. "Mind, Body, Bubble! Psychological and Biophysical Dimensions of Behavior in Experimental Asset Markets," IZA Discussion Papers 11563, Institute for the Study of Labor (IZA).
    2. Utz Weitzel & Christoph Huber & Florian Lindner & Jürgen Huber & Julia Rose & Michael Kirchler, 2018. "Bubbles and financial professionals," Working Papers 2018-04, Faculty of Economics and Statistics, University of Innsbruck, revised Jun 2018.

    More about this item

    Keywords

    Price bubbles; Gender; Asset markets; Forecasting; Adaptive expectations; Risk aversion; Cognitive abilities; Laboratory experiments;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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