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Does communication matter in experimental asset markets?

Author

Listed:
  • Aurora García-Gallego

    (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain)

  • Tibor Neugebauer

    (Department of Finance, Luxembourg School of Finance, University of Luxembourg, Luxembourg)

Abstract

This study explores the impact of free-form chat on asset pricing and trading in a lab setting. In a mispricing-prone market, participants facing team-performance incentives communicated in chat groups. We compare three chat treatments: "friends", where participants personally knew their chat partners, and "random teams" with/out price prediction, where groups were assigned anonymously. While free-form chat does not reduce mispricing, it seems to influence transaction volume. A textual analysis using dictionaries focused on strategic coordination, risk management, market understanding, and information sharing shows that groups focusing on the former two tend to perform better. We review the contributions of Gary Charness to the area of communication in experiments.

Suggested Citation

  • Aurora García-Gallego & Tibor Neugebauer, 2025. "Does communication matter in experimental asset markets?," Working Papers 2025/03, Economics Department, Universitat Jaume I, Castellón (Spain).
    • Handle: RePEc:jau:wpaper:2025/03
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    More about this item

    Keywords

    experimental asset market; communication; textual analysis;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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