NDLI: Two heads are less bubbly than one: team decision-making in an experimental asset market

Content Provider	Springer Nature Link
Author	Cheung, Stephen L. Palan, Stefan
Copyright Year	2011
Abstract	In the world of mutual funds management, responsibility for investment decisions is increasingly entrusted to small teams instead of individuals. Yet the effect of team decision-making in a market environment has never been studied in a controlled experiment. In this paper, we investigate the effect of team decision-making in an asset market experiment that has long been known to reliably generate price bubbles and crashes in markets populated by individuals. We find that this tendency is substantially reduced when each decision-making unit is instead a team of two. This holds across a broad spectrum of measures of the severity of mispricing, both under a continuous double-auction institution and in a call market. The result is not driven by reduced turnover due to time required for deliberation by teams, and continues to hold even when subjects are experienced. Our result also holds not only when our teams treatments are compared to the ‘narrow’ baseline provided by the corresponding individuals treatments, but also when compared more broadly to the results of the large body of previous research on markets of this kind.
Starting Page	373
Ending Page	397
Page Count	25
File Format	PDF
ISSN	13864157
Journal	Experimental Economics
Volume Number	15
Issue Number	3
e-ISSN	15736938
Language	English
Publisher	Springer US
Publisher Date	2011-09-29
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Group decision-making Price bubbles Asset market experiments Public Finance & Economics Operations Research/Decision Theory Microeconomics Methodology and the History of Economic Thought Economic Theory
Content Type	Text
Resource Type	Article
Subject	Economics, Econometrics and Finance

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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Two heads are less bubbly than one: team decision-making in an experimental asset market

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