Thar she resurges: The case of assets that lack positive fundamental value

This experimental study investigates the trading of assets that mimic the features of most cryptocurrencies. Groups of traders are randomized into asset markets where fundamental values are either positive, zero, or negative. Our findings indicate the presence of much larger bubbles in asset markets with non-positive fundamental values than in asset markets with positive fundamental values, with either risky or risk-free dividends. We show that these findings are consistent with trader expectations but not with loss aversion and complexity. This study provides experimental evidence that supports the need for particular scrutiny of asset markets that lack positive fundamental value.