Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/122209
Authors: 
Kirchler, Michael
Bonn, Caroline
Huber, Jürgen
Razen, Michael
Year of Publication: 
2014
Series/Report no.: 
Working Papers in Economics and Statistics 2014-22
Abstract: 
We investigate the impact of trader and cash inflow on bubble formation in asset markets with a novel design featuring heterogeneous information and a constant fundamental value. Implementing seven treatments we find that (i) only the joint inflow of traders and cash triggers bubbles ("inflow-effect"). (ii) In treatments with trader and cash inflow only in the first half of the market, prices converge to fundamentals towards maturity of the asset. This inflow-effect is very robust as we observe bubbles in almost all of the 24 markets with trader inflow. The analysis of traders' beliefs reveals that (iii) despite fundamentals staying constant, beliefs about fundamentals co-move with upwardly trending prices. Finally, we report a speculative motive only among the optimists in treatments where we observe bubbles.
Subjects: 
experimental finance
inflow-effect
trader inflow
asset market
bubble
market efficiency
JEL: 
C92
D84
G10
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.