Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146123
Authors: 
Razen, Michael
Huber, Jürgen
Kirchler, Michael
Year of Publication: 
2016
Series/Report no.: 
Working Papers in Economics and Statistics 2016-06
Abstract: 
It is conjectured that one of the major ingredients of historic financial bubbles was the inflow of money in various forms. We run 36 laboratory asset markets and investigate the joint effect of cash inflow and trading horizon on price efficiency. We show that only markets with cash inflow and long trading horizon exhibit bubbles and crashes. We also observe that markets with extended trading horizon but without cash inflow and markets with shorter trading horizon do not trigger bubbles. Finally, we report that beliefs about prices and, importantly, about (constant) fundamentals follow bubble patterns as well.
Subjects: 
experimental finance
cash inflow
trading horizon
backward induction
asset market
price efficiency
JEL: 
C92
D84
G10
Document Type: 
Working Paper

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