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Relative performance information in asset markets: An experimental approach

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  • Schoenberg, Eric J.
  • Haruvy, Ernan

Abstract

An important issue in the study of asset market bubbles is the extent to which traders are influenced by their perceived performance relative to other traders. Extant research on laboratory asset market bubbles has generally kept performance information private, effectively excluding such considerations from experimental control. We provide traders in an experimental market with a 15-period finitely lived asset with periodic performance information for one other trader—either the best performer or the worst performer—and find significant effects on both aggregate market measures, such as market prices and boom duration, and individual subjective satisfaction.

Suggested Citation

  • Schoenberg, Eric J. & Haruvy, Ernan, 2012. "Relative performance information in asset markets: An experimental approach," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1143-1155.
    • Handle: RePEc:eee:joepsy:v:33:y:2012:i:6:p:1143-1155
    DOI: 10.1016/j.joep.2012.08.008
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    More about this item

    Keywords

    Asset markets; Experiments; Bubbles; Relative performance;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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