A "sunspot" is a variable that has no direct impact on the economy's fundamental condition, such as preferences, endowments or technologies, but may nonetheless affect economic outcomes through the expectations channel as a coordination device. This paper investigates how people react to...

We study indefinitely lived assets in experimental markets and find that the traded prices of these assets are, on average, about 40% of the risk-neutral fundamental value. Neither uncertainty about the value of total dividend payments nor horizon uncertainty about the duration of trade can...

The theoretical approach in dealing with the aggregation of information in markets in general, and financial markets in particular considers information as an exogenous element to the system, focusing just on conditions and consequences of the efficient incorporation of information into prices....

This paper aims at providing an overview of several topics that have been addressed in the field of experimental asset markets. Rather than being exhaustive in any single topic, this review is meant to gather the several research strands, and to provide a powerful picture of the main advances on...

We investigate traders’ behaviour in an experimental asset market where uninformed agents cannot be sure about the presence of insiders. In this framework we compare two trading institutions: the continuous double auction and the call market. The purpose of this comparison is to test which of...

We study the formation of price bubbles on experimental asset markets where cash earns interest. There are two main conclusions. The first is that paying positive interest on cash is ineffective in diminishing bubbles through the reducing-active-participation channel. The second is that the...

We study the relationship between market efficiency and the distribution of private information in experimental financial asset markets. Traders receive imperfect signals over the real value of an asset. Agents can share their information within a relatively small - compared to market size -...