Replication data for: Thar She Bursts: Reducing Confusion Reduces Bubbles
Principal Investigator(s): View help for Principal Investigator(s) Michael Kirchler; Jürgen Huber; Thomas Stöckl
Version: View help for Version V1
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Project Citation:
Kirchler, Michael, Huber, Jürgen, and Stöckl, Thomas. Replication data for: Thar She Bursts: Reducing Confusion Reduces Bubbles. Nashville, TN: American Economic Association [publisher], 2012. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-06. https://doi.org/10.3886/E116103V1
Project Description
Summary:
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To explore why bubbles frequently emerge in the experimental asset market model of Smith, Suchanek, and Williams (1988), we vary the fundamental value process (constant or declining) and the cash-to-asset value ratio (constant or increasing). We observe high mispricing
in treatments with a declining fundamental value, while overvaluation emerges when coupled with an increasing C/A ratio. A questionnaire reveals that the declining fundamental value process
confuses subjects, as they expect the fundamental value to stay constant. Running the experiment with a different context ("stocks of a depletable gold mine" instead of "stocks") significantly reduces mispricing and overvaluation as it reduces confusion. (JEL C91, D14, G11, G12)
Scope of Project
JEL Classification:
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C91 Design of Experiments: Laboratory, Individual
D14 Household Saving; Personal Finance
G11 Portfolio Choice; Investment Decisions
G12 Asset Pricing; Trading Volume; Bond Interest Rates
C91 Design of Experiments: Laboratory, Individual
D14 Household Saving; Personal Finance
G11 Portfolio Choice; Investment Decisions
G12 Asset Pricing; Trading Volume; Bond Interest Rates
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