Publication
Sep 2011
This paper investigates the relationship between market overconfidence and occurrence of stock-price bubbles. Sixty participants traded stocks in ten experimental asset markets. Prices in rational markets tend to track the fundamental asset value more accurately than prices in overconfident markets and are significantly lower and less volatile. Altogether, our data provide evidence that overconfidence has strong effects on prices and trading behavior in experimental asset markets.
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English (PDF, 37 pages, 960 KB) |
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Author | Julija Michailova, Ulrich Schmidt |
Series | Kiel Institute Working Papers |
Issue | 1729 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2011 Kiel Institute for the World Economy |