(A)symmetric information bubbles: Experimental evidence

Research output: Contribution to journalArticle

Abstract

Asymmetric information has explained the existence of a bubble in extant theoretical models. This study experimentally analyzes traders’ choices with and without asymmetric information based on the riding-bubble model. We show that traders tend to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric, information. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise with symmetric information. By contrast, the size of the bubble is stable in a market with asymmetric information.

Original languageEnglish
Article number103744
JournalJournal of Economic Dynamics and Control
DOIs
Publication statusAccepted/In press - 2019 Jan 1

    Fingerprint

Keywords

  • Asymmetric information
  • Clock game
  • Crashes
  • Experiment
  • Riding bubbles

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics

Cite this