Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307668 
Year of Publication: 
2024
Series/Report no.: 
Working Papers in Economics and Statistics No. 2024-09
Publisher: 
University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon), Innsbruck
Abstract: 
In a pre-registered laboratory asset market study, we investigate dynamics of asset markets with zero (or close to zero) fundamental values. We introduce the "greater fool asset market game" with a zero-value token, whose price doubles in each period. We design several treatments, which differ in terms of whether the fundamental value is zero for sure, and whether the rather low probability of non-zero fundamentals is known (Risk) or not (Ambiguity). We find that prices in markets with zero fundamental value are clearly above zero. Furthermore, we report that prices in treatment Ambiguity are substantially higher than those in the baseline and in treatment Risk. Finally, we show that beliefs regarding the asset's value and others' participation explain individual market participation.
Subjects: 
speculative bubbles
greater fool
behavioral economics
experimental finance
JEL: 
C91
C92
G12
G41
Document Type: 
Working Paper

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