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Explaining Bubbles in Experimental Asset Markets
| Content Provider | Semantic Scholar |
|---|---|
| Author | Fisher, Eric O’ N. |
| Copyright Year | 1998 |
| Abstract | Using experimental data from asset markets without short selling, this paper shows that bubbles arise for two reasons. First, subjects take time to learn about the dividends, not trusting initially the experiment's instructions. Second, agents have heterogeneous prior beliefs. These data support a Bayesian model of asset prices against the alternative hypothesis that agents have common priors agreeing with the actual distribution of fundamentals. This evidence confirms a subtle version of rational expectations in which assets are priced according to agents’ priors and the market’s history. *The author would like to thank Jim Peck, Marine Carrasco, Nelson Mark, Joel Watson, Molly Cooper, and seminar participants at The Ohio State University, University of California at San Diego, University of Arizona, and the Midwest Macroeconomics Meetings at St. Louis for useful comments on earlier drafts of this work. The author will make available at cost a diskette containing all the data and programs used in the text. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://economics.sbs.ohio-state.edu/pdf/fisher/explain.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
