TY - JOUR
T1 - (A)symmetric information bubbles
T2 - Experimental evidence
AU - Asako, Yasushi
AU - Funaki, Yukihiko
AU - Ueda, Kozo
AU - Uto, Nobuyuki
N1 - Funding Information:
The authors thank the editors, the three anonymous referees, Shinichi Hirota, Kohei Kawamura, Takao Kusakawa, Nobuyuki Hanaki, Hirokazu Ishise, Charles Noussair, Robert Veszteg, and the participants at the BEAM-ABEE workshop. All errors are our own. This project was supported by JSPS KAKENHI Grant Numbers 26245026 and 26380247 and leading research organizations, namely ANR, DFG, ESRC, and NWO, as associated organizations under the Open Research Area for the Social Sciences (ORA).
Publisher Copyright:
© 2019 The Authors
PY - 2020/1
Y1 - 2020/1
N2 - Asymmetric information has explained the existence of a bubble in extant theoretical models. This study experimentally analyzes traders’ choices with and without asymmetric information based on the riding-bubble model. We show that traders tend to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric, information. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise with symmetric information. By contrast, the size of the bubble is stable in a market with asymmetric information.
AB - Asymmetric information has explained the existence of a bubble in extant theoretical models. This study experimentally analyzes traders’ choices with and without asymmetric information based on the riding-bubble model. We show that traders tend to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric, information. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise with symmetric information. By contrast, the size of the bubble is stable in a market with asymmetric information.
KW - Asymmetric information
KW - Clock game
KW - Crashes
KW - Experiment
KW - Riding bubbles
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U2 - 10.1016/j.jedc.2019.103744
DO - 10.1016/j.jedc.2019.103744
M3 - Article
AN - SCOPUS:85072257880
SN - 0165-1889
VL - 110
JO - Journal of Economic Dynamics and Control
JF - Journal of Economic Dynamics and Control
M1 - 103744
ER -