Overreactions , Momentum , Liquidity , and Price Bubbles in Laboratory and Field Asset Markets

  title={Overreactions , Momentum , Liquidity , and Price Bubbles in Laboratory and Field Asset Markets},
  author={Gunduz Caginalp and David Porter and Vernon L. Smith},
Laboratory asset markets provide an experimental setting in which to observe investor behavior. Over more than a decade, numerous studies have found that participants in laboratory experiments frequently drive asset prices far above fundamental value, after which the prices crash. This bubble-and-crash behavior is robust to variations in a number of variables, including liquidity (the amount of cash available relative to the value of the assets being traded), short-selling, certainty or… CONTINUE READING
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