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

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dc.contributor.author Corgnet, Brice
dc.contributor.author Hernán, Roberto
dc.contributor.author Kujal, Praveen
dc.contributor.author Porter, David
dc.contributor.editor Universidad Carlos III de Madrid. Departamento de Economía
dc.date.accessioned 2013-02-26T16:14:13Z
dc.date.available 2013-02-26T16:14:13Z
dc.date.issued 2013-02
dc.identifier.issn 2340-5031
dc.identifier.uri http://hdl.handle.net/10016/16384
dc.description.abstract Can “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.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries UC3M Working papers. Economics
dc.relation.ispartofseries 13-04
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.title The effect of earned vs. house money on price bubble formation in experimental asset markets
dc.type workingPaper
dc.subject.eciencia Economía
dc.rights.accessRights openAccess
dc.type.version submitedVersion
dc.identifier.repec we1304
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