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Title:Two heads are less bubbly than one: team decision-making in an experimental asset market PDF Logo
Authors:Cheung, Stephen L.
Palan, Stefan
Issue Date:2009
Series/Report no.:IZA Discussion Papers 4507
Abstract:We study the effect of team decision-making on bubbles and crashes in experimental asset markets of the kind introduced by Smith, Suchanek and Williams (1988). We find that populating such markets with teams of size two instead of individuals significantly reduces the severity of mispricing. In particular we observe that under our teams treatment, deviations in prices away from intrinsic value are significantly smaller in magnitude, shorter in duration and associated with lower volume and price volatility. We also find an unexpected gender effect in team composition, manifesting itself in more extreme - though not consistently more profitable - behaviour by all-male teams. Since these effects are not observed among male participants generally, we conjecture that they may be due to factors specific to the psychology of decision-making in male-dominated environments.
Subjects:Asset market experiments
price bubbles
group decision-making
gender composition of teams
JEL:C92
D70
G12
Persistent Identifier of the first edition:urn:nbn:de:101:1-200911041011
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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