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Public Messages and Asset Prices

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  • Adrian Stoian

Abstract

We analyze the potential role of a public message as a coordination mechanism between traders in an experimental asset market that exhibits departures from fundamental values. Dividends are the same for all players except for an unknown ex-ante. During the treatment sessions, a message that does not offer new information is sent to all traders at the same predetermined time. We compare deviations from fundamental prices in sessions with and without a message. We find no statistical evidence that a public message without informational content is able to bring prices back to fundamental values. Copyright International Atlantic Economic Society 2014

Suggested Citation

  • Adrian Stoian, 2014. "Public Messages and Asset Prices," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(4), pages 441-454, December.
  • Handle: RePEc:kap:atlecj:v:42:y:2014:i:4:p:441-454
    DOI: 10.1007/s11293-014-9431-5
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    References listed on IDEAS

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    1. Dilip Abreu & Markus K. Brunnermeier, 2003. "Bubbles and Crashes," Econometrica, Econometric Society, vol. 71(1), pages 173-204, January.
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    Cited by:

    1. Praveen Kujal & Owen Powell, 2017. "Bubbles in Experimental Asset Markets," Working Papers 17-01, Chapman University, Economic Science Institute.
    2. Owen Powell & Natalia Shestakova, 2017. "Experimental asset markets: behavior and bubbles," Chapters, in: Morris Altman (ed.), Handbook of Behavioural Economics and Smart Decision-Making, chapter 21, pages 375-391, Edward Elgar Publishing.
    3. Lucy F. Ackert & Lei Jiang & Li Qi, 2016. "Experiments on Electronic Double Auctions and Abnormal Trades," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 87-104, July.

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    More about this item

    Keywords

    Bubble; Public message; Communication; Coordination; Central bank; C92; G12;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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