Bubbles and Crashes in Experimental Asset Markets [electronic resource] / by Stefan Palan.

By:

Palan, Stefan [author.]

Contributor(s):

SpringerLink (Online service)

Series: Lecture Notes in Economics and Mathematical Systems ; 626Publisher: Berlin, Heidelberg : Springer Berlin Heidelberg, 2009Description: 171 p. 20 illus. online resourceContent type:

text

Media type:

computer

Carrier type:

online resource

ISBN:

9783642021473

Subject(s):

Genre/Form:

Electronic books.

Additional physical formats: Printed edition:: No titleDDC classification:

339 23

LOC classification:

HB172.5

Online resources:

Click here to access online

Contents:

and Motivation -- Literature Review -- Experimental Design and Methodology -- Results -- Conclusion and Outlook -- Appendices.

In: Springer eBooksSummary: This book describes a laboratory experiment designed to test the causes and properties of bubbles in financial markets and explores the question whether it is possible to design markets which avoid such bubbles and crashes. In the experiment, subjects were given the opportunity to trade in a stock market modeled after the seminal work of Smith et al. (1988). To account for the increasing importance of online betting sites, subjects were also allowed to trade in a digital option market. The outcomes shed new light on how subjects form and update their expectations, placing special emphasis on the bounded rationality of investors. Various analytical bubble measures found in the literature are collected, calculated, classified and presented for the first time. The very interesting new bubble measures "Dispersion Ratio", "Overpriced Transactions" and "Underpriced Transactions" are developed, making the book an important step towards the research goal of preventing bubbles and crashes in financial markets. In addition, the book formulates concrete new research hypotheses for future studies.

Item type:

eBooks

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and Motivation -- Literature Review -- Experimental Design and Methodology -- Results -- Conclusion and Outlook -- Appendices.

This book describes a laboratory experiment designed to test the causes and properties of bubbles in financial markets and explores the question whether it is possible to design markets which avoid such bubbles and crashes. In the experiment, subjects were given the opportunity to trade in a stock market modeled after the seminal work of Smith et al. (1988). To account for the increasing importance of online betting sites, subjects were also allowed to trade in a digital option market. The outcomes shed new light on how subjects form and update their expectations, placing special emphasis on the bounded rationality of investors. Various analytical bubble measures found in the literature are collected, calculated, classified and presented for the first time. The very interesting new bubble measures "Dispersion Ratio", "Overpriced Transactions" and "Underpriced Transactions" are developed, making the book an important step towards the research goal of preventing bubbles and crashes in financial markets. In addition, the book formulates concrete new research hypotheses for future studies.