Abstract
To what extent is the observed mispricing in experimental asset markets caused by strategic uncertainty and by confusion? We address this question by comparing subjects’ initial price forecasts in two market environments: one with six human traders and the other with one human and five computer traders. We find that both strategic uncertainty and confusion contribute equally to the median initial forecast deviation from the fundamental value. The effect of strategic uncertainty is greater for subjects with a perfect score in the cognitive reflection test, and it is not significant for those with low scores.
| Original language | English |
|---|---|
| Pages (from-to) | F563-F580 |
| Journal | Economic Journal |
| Volume | 127 |
| Issue number | 605 |
| DOIs | |
| Publication status | Published - 2017 Oct 1 |
| Externally published | Yes |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
It is Not Just Confusion! Strategic Uncertainty in An Experimental Asset Market. / Akiyama, Eizo; Hanaki, Nobuyuki; Ishikawa, Ryuichiro.
In: Economic Journal, Vol. 127, No. 605, 01.10.2017, p. F563-F580.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - It is Not Just Confusion! Strategic Uncertainty in An Experimental Asset Market
AU - Akiyama, Eizo
AU - Hanaki, Nobuyuki
AU - Ishikawa, Ryuichiro
PY - 2017/10/1
Y1 - 2017/10/1
N2 - To what extent is the observed mispricing in experimental asset markets caused by strategic uncertainty and by confusion? We address this question by comparing subjects’ initial price forecasts in two market environments: one with six human traders and the other with one human and five computer traders. We find that both strategic uncertainty and confusion contribute equally to the median initial forecast deviation from the fundamental value. The effect of strategic uncertainty is greater for subjects with a perfect score in the cognitive reflection test, and it is not significant for those with low scores.
AB - To what extent is the observed mispricing in experimental asset markets caused by strategic uncertainty and by confusion? We address this question by comparing subjects’ initial price forecasts in two market environments: one with six human traders and the other with one human and five computer traders. We find that both strategic uncertainty and confusion contribute equally to the median initial forecast deviation from the fundamental value. The effect of strategic uncertainty is greater for subjects with a perfect score in the cognitive reflection test, and it is not significant for those with low scores.
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UR - http://www.scopus.com/inward/citedby.url?scp=85032365031&partnerID=8YFLogxK
U2 - 10.1111/ecoj.12338
DO - 10.1111/ecoj.12338
M3 - Article
AN - SCOPUS:85032365031
VL - 127
SP - F563-F580
JO - Economic Journal
JF - Economic Journal
SN - 0013-0133
IS - 605
ER -