Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100873
Authors: 
Ackert, Lucy F.
Church, Bryan K.
Jayaraman, Narayanan
Year of Publication: 
2002
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2002-25
Abstract: 
This study conducts experimental asset markets to examine the effects of circuit breaker rules on market behavior when agents are uncertain about the presence of private information. Our results unequivocally indicate that circuit breakers fail to temper unwarranted price movements in periods without private information. Agents appear to mistakenly infer that others possess private information, causing price to move away from fundamental value. Allocative efficiencies in our markets are high across all regimes. Circuit breakers perform no useful function in our experimental asset markets.
Subjects: 
Markets
Financial markets
Risk
Document Type: 
Working Paper

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