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A Review of Research into Smith, Suchanek and Williams Markets

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  • Stefan Palan

    () (Institute of Banking and Finance, Karl-Franzens-University Graz
    Department of Banking and Finance, Leopold-Franzens-University Innsbruck)

Abstract

This article discusses the literature on bubbles and crashes in the most commonly used experimental asset market design, introduced by Smith, Suchanek and Williams (1988). It documents the main findings based on the results from 33 published articles and 25 working papers. The qualitative analysis and interpretation is furthermore complemented by summary statistics from an extensive database of close to 1600 individual bubble measure observations.

Suggested Citation

  • Stefan Palan, 2013. "A Review of Research into Smith, Suchanek and Williams Markets," Working Paper Series, Social and Economic Sciences 2013-04, Faculty of Social and Economic Sciences, Karl-Franzens-University Graz.
  • Handle: RePEc:grz:wpsses:2013-04
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    References listed on IDEAS

    as
    1. Sheryl B. Ball & Charles A. Holt, 1998. "Classroom Games: Speculation and Bubbles in an Asset Market," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 207-218, Winter.
    2. Vivian Lei & Filip Vesely, 2009. "Market Efficiency: Evidence From A No-Bubble Asset Market Experiment," Pacific Economic Review, Wiley Blackwell, vol. 14(2), pages 246-258, May.
    3. Ackert, Lucy F. & Charupat, Narat & Deaves, Richard & Kluger, Brian D., 2009. "Probability Judgment Error and Speculation in Laboratory Asset Market Bubbles," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 44(03), pages 719-744, June.
    4. Lei, Vivian & Noussair, Charles N & Plott, Charles R, 2001. "Nonspeculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality vs. Actual Irrationality," Econometrica, Econometric Society, vol. 69(4), pages 831-859, July.
    5. Stephen Cheung & Stefan Palan, 2012. "Two heads are less bubbly than one: team decision-making in an experimental asset market," Experimental Economics, Springer;Economic Science Association, vol. 15(3), pages 373-397, September.
    6. Martin Dufwenberg & Tobias Lindqvist & Evan Moore, 2005. "Bubbles and Experience: An Experiment," American Economic Review, American Economic Association, vol. 95(5), pages 1731-1737, December.
    7. Charles N. Noussair & Owen Powell, 2010. "Peaks and valleys: Price discovery in experimental asset markets with non-monotonic fundamentals," Journal of Economic Studies, Emerald Group Publishing, vol. 37(2), pages 152-180, May.
    8. Michailova, Julija, 2010. "Overconfidence and bubbles in experimental asset markets," MPRA Paper 26388, University Library of Munich, Germany.
    9. Volodymyr Lugovskyy & Daniela Puzzello & Steven Tucker, 2011. "An Experimental Study of Bubble Formation in Asset Markets Using the Tâtonnement Trading Institution," Working Papers in Economics 11/07, University of Canterbury, Department of Economics and Finance.
    10. Corgnet, Brice & Kujal, Praveen & Porter, David, 2010. "The effect of reliability, content and timing of public announcements on asset trading behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 254-266, November.
    11. Cheung, Stephen L. & Coleman, Andrew, 2011. "League-Table Incentives and Price Bubbles in Experimental Asset Markets," IZA Discussion Papers 5704, Institute for the Study of Labor (IZA).
    12. Cheung, Stephen L. & Hedegaard, Morten & Palan, Stefan, 2014. "To see is to believe: Common expectations in experimental asset markets," European Economic Review, Elsevier, vol. 66(C), pages 84-96.
    13. Mark van Boening & Vernon L. Smith & Charissa P. Wellford, 2000. "Dividend timing and behavior in laboratory asset markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(3), pages 567-583.
    14. Vernon L. Smith, 1965. "Experimental Auction Markets and the Walrasian Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 73, pages 387-387.
    15. Porter, David P & Smith, Vernon L, 1995. "Futures Contracting and Dividend Uncertainty in Experimental Asset Markets," The Journal of Business, University of Chicago Press, vol. 68(4), pages 509-541, October.
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    17. AJ A. Bostian & Charles A. Holt, 2009. "Price Bubbles with Discounting: A Web-Based Classroom Experiment," The Journal of Economic Education, Taylor & Francis Journals, vol. 40(1), pages 27-37, January.
    18. Lei, Vivian & Noussair, Charles & Plott, Charles R., 2002. "Asset Bubbles and Rationality: Additional Evidence from Capital Gains Tax Experiments," Working Papers 1137, California Institute of Technology, Division of the Humanities and Social Sciences.
    19. Ernan Haruvy & Charles N. Noussair, 2006. "The Effect of Short Selling on Bubbles and Crashes in Experimental Spot Asset Markets," Journal of Finance, American Finance Association, vol. 61(3), pages 1119-1157, June.
    20. Giusti, Giovanni & Jiang, Janet Hua & Xu, Yiping, 2012. "Eliminating Laboratory Asset Bubbles by Paying Interest on Cash," MPRA Paper 37321, University Library of Munich, Germany.
    21. Van Boening, Mark V. & Williams, Arlington W. & LaMaster, Shawn, 1993. "Price bubbles and crashes in experimental call markets," Economics Letters, Elsevier, vol. 41(2), pages 179-185.
    22. Reshmaan N. Hussam & David Porter & Vernon L. Smith, 2008. "Thar She Blows: Can Bubbles Be Rekindled with Experienced Subjects?," American Economic Review, American Economic Association, vol. 98(3), pages 924-937, June.
    23. Jürgen Huber & Michael Kirchler, 2012. "The impact of instructions and procedure on reducing confusion and bubbles in experimental asset markets," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 89-105, March.
    24. J. Michael Harrison & David M. Kreps, 1978. "Speculative Investor Behavior in a Stock Market with Heterogeneous Expectations," The Quarterly Journal of Economics, Oxford University Press, vol. 92(2), pages 323-336.
    25. Stefan Palan, 2013. "A Review Of Bubbles And Crashes In Experimental Asset Markets," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 570-588, July.
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