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The effect of earned vs. house money on price bubble formation in experimental asset markets

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorCorgnet, Brice
dc.contributor.authorHernán, Roberto
dc.contributor.authorKujal, Praveen
dc.contributor.authorPorter, David
dc.contributor.editorUniversidad Carlos III de Madrid. Departamento de Economía
dc.date.accessioned2013-02-26T16:14:13Z
dc.date.available2013-02-26T16:14:13Z
dc.date.issued2013-02
dc.description.abstractCan “house money” explain asset market bubbles? We test this hypothesis in an asset experiment with a certain dividend cash and shares is given to subjects initial portfolios are constructed using subject that bubbles still occur; however trading volumes are significantly abated and the dispersion of earnings is significantly lower when subjects earn their starting endowments. We investigate the role of cognitive ability in accounting for the differences in earnings distribution across treatments by using the Cognitive Reflection Test (CRT). We find that high CRT subjects earned more money on average than the initial value of their portfolio while low CRT subjects earned less. Subjects with low CRT scores were net purchasers (sellers) of shares when the price was above (below) fundamental value while the opposite was true for subjects with high CRT scores.
dc.format.mimetypeapplication/pdf
dc.identifier.issn2340-5031
dc.identifier.repecwe1304
dc.identifier.urihttps://hdl.handle.net/10016/16384
dc.language.isoeng
dc.relation.ispartofseriesUC3M Working papers. Economics
dc.relation.ispartofseries13-04
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRightsopen access
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.ecienciaEconomía
dc.titleThe effect of earned vs. house money on price bubble formation in experimental asset markets
dc.typeworking paper*
dc.type.hasVersionSMUR*
dspace.entity.typePublication
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