Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/51801
Authors: 
Cheung, Stephen L.
Coleman, Andrew
Year of Publication: 
2011
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5704
Abstract: 
We study experimental markets in which participants face incentives modeled upon those prevailing in markets for managed funds. Each participant's portfolio is periodically evaluated at market value and ranked in a league table according to short-term paper returns. Those who rank highly attract a larger share of new fund inflows. Under conditions in which prices are close to intrinsic value, the effect of incentives is mild. However under conditions in which markets are prone to bubble, mispricing is greatly exacerbated by incentives. Even in experienced markets, prices climb to levels clearly indicative of speculation and do not always crash back.
Subjects: 
league tables
price bubbles
managed funds markets
tournament incentives
asset market experiments
JEL: 
C92
G12
M52
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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