Nonspeculative Bubbles in Experimental Asset Market. Lei, Noussair and Plott (2001). Presented by Huanren (Warren) Zhang. Outlines. Introduction to Bubbles Research Questions: Why do bubbles occur ? Speculative Hypothesis Active Participation Hypothesis Experimental Design Results
Nonspeculative Bubbles in Experimental Asset Market
Lei, Noussair and Plott (2001)
Presented by Huanren(Warren) Zhang
The volume of trading is significantly reduced in the two-market treatment. The volume of trades falls by about 35% when a second market is introduced (Table IV).
However, bubbles are still observed and median prices are not significantly affected by the introduction of a second market.
Thus, the data supports the Active Participation Hypotheses, but this hypothesis cannot explain the pricing patterns in bubbles.