Are You Experienced?
We evaluate how traders' asset market activities are distributed in time impacts pricing efficiency, volume, and individual portfolio holdings. Through the first controlled experiment on such timing, we find that cohorts who participate in a sequence of three markets in a single experimental session generate more mispricing and bubbles - but the same trade volume and variability in portfolio values - than cohorts whose three markets are spaced a week apart. We further find that experience gained through spaced repetitions, as opposed to massed repetitions, leads to smaller price bubbles when subjects are recruited to a new cohort and participate in a market for a different asset.
|Date of creation:||29 Jun 2014|
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Web page: https://mpra.ub.uni-muenchen.de
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- Janiszewski, Chris & Noel, Hayden & Sawyer, Alan G, 2003. " A Meta-analysis of the Spacing Effect in Verbal Learning: Implications for Research on Advertising Repetition and Consumer Memory," Journal of Consumer Research, Oxford University Press, vol. 30(1), pages 138-149, June.
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- Lei Feng & Mark Seasholes, 2005. "Do Investor Sophistication and Trading Experience Eliminate Behavioral Biases in Financial Markets?," Review of Finance, Springer, vol. 9(3), pages 305-351, 09.
- Greenwood, Robin & Nagel, Stefan, 2009.
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- Robin Greenwood & Stefan Nagel, 2008. "Inexperienced Investors and Bubbles," NBER Working Papers 14111, National Bureau of Economic Research, Inc.
- George M Korniotis & Alok Kumar, 2011. "Do Older Investors Make Better Investment Decisions?," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 244-265, February.
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- Ernan Haruvy & Yaron Lahav & Charles N. Noussair, 2007. "Traders' Expectations in Asset Markets: Experimental Evidence," American Economic Review, American Economic Association, vol. 97(5), pages 1901-1920, December.
- Smith, Vernon L & Suchanek, Gerry L & Williams, Arlington W, 1988. "Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets," Econometrica, Econometric Society, vol. 56(5), pages 1119-1151, September.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
- Amit Seru & Tyler Shumway & Noah Stoffman, 2010. "Learning by Trading," Review of Financial Studies, Society for Financial Studies, vol. 23(2), pages 705-739, February.
- 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.
- Michael Kirchler & Jurgen Huber & Thomas Stockl, 2012. "Thar She Bursts: Reducing Confusion Reduces Bubbles," American Economic Review, American Economic Association, vol. 102(2), pages 865-883, April.
- Michael Kirchler & Juergen Huber & Thomas Stoeckl, 2011. "Thar she bursts - Reducing confusion reduces bubbles," Working Papers 2011-08, Faculty of Economics and Statistics, University of Innsbruck.
- 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.
- 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, 07. Full references (including those not matched with items on IDEAS)
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