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The influence of in...
The influence of investment experience on market prices: laboratory evidence
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Huber, Jürgen (author)
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- Kirchler, Michael, 1977 (author)
- Gothenburg University,Göteborgs universitet,Institutionen för nationalekonomi med statistik,Centrum för finans,Department of Economics,Centre for Finance
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Stockl, T. (author)
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(creator_code:org_t)
- 2015-05-29
- 2016
- English.
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In: Experimental Economics. - : Springer Science and Business Media LLC. - 1386-4157 .- 1573-6938. ; 19:2, s. 394-411
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Abstract
Subject headings
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- We run laboratory experiments to analyze the impact of prior investment experience on price efficiency in asset markets. Before subjects enter the asset market they gain either no, positive, or negative investment experience in an investment game. To get a comprehensive picture about the role of experience we implement two asset market designs. One is prone to inefficient pricing, exhibiting bubble and crash patterns, while the other exhibits efficient pricing. We find that (i) both, positive and negative, experience gained in the investment game lead to efficient pricing in both market settings. Further, we show that (ii) the experience effect dominates potential effects triggered by positive and negative sentiment generated by the investment game. We conjecture that experiencing changing price paths in the investment game can create a higher sensibility on changing fundamentals (through higher salience) among subjects in the subsequently run asset market.
Subject headings
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business (hsv//eng)
Keyword
- Experimental finance
- Asset market
- Bubble
- Mispricing
- Information
- Experience
- EXPERIMENTAL ASSET MARKETS
- BUBBLES
- INVESTORS
- EXPECTATIONS
- CRASHES
- ANOMALIES
- BEHAVIOR
- AVERSION
Publication and Content Type
- ref (subject category)
- art (subject category)
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