A series of experiments, in which nine participants trade an asset over 15 periods, test the hypothesis that an initial imbalance of asset/cash will influence the trading price over an extended time. Participants know at the outset that the asset or quot;stockquot; pays a single dividend with...

Price volatility and investor overreactions are commonplace in experimental asset markets. Understanding the price dynamics in these markets is crucial for designing successful new trading institutions. We report on a series of experiments to test the predictions of a new momentum model using a...

We report on a large number of laboratory market experiments demonstrating that a market bubble can be reduced under the following conditions: 1) a low initial liquidity level, i.e., less total cash than value of total shares, 2) deferred dividends, and 3) a bid-ask book that is open to traders....

A system of ordinary differential equations is used to study the price dynamics of an asset under various conditions. One of these involves the introduction of new information that is interpreted differently by two groups. Another studies the price change due to a change in the number of shares....

The quotient of random variables with normal distributions is examined and proven to have have power law decay, with density f(x)~f_0 x^(-2), with the coefficient depending on the means and variances of the numerator and denominator, and their correlation. We also obtain the conditional...

Cryptocurrencies are examined through the asset flow equations and experimental asset markets. Since tangible value of a typical cryptocurrency is non-existent, the theory suggests that price will gravitate toward liquidity value, i.e., the total amount of cash available for purchase of the...

In many business situations, one party makes an offer (e.g., broker offers a commission to client) that can either be accepted or rejected by the other party. If it is rejected, both gain nothing. Common sense, business experience and theory suggest that the proposer would partition the sum so...

We utilize optimization methods to determine equilibria of cryptocurrencies. A core group, the wealthy, fears the loss of assets that can be seized by a government. Volatility may be influenced by speculators. The wealthy must divide their assets between the home currency and the...

A symmetric supply/demand model of price dynamics is developed and used to understand the relationship between price change and volatility. This differs from the classical approach in which the expected rate of price change and variance are assumed to be independent. The microeconomic and...

We study the stability and Hopf bifurcation analysis of an asset pricing model that is based on the model introduced by Caginalp and Balenovich, under the assumption of a fixed amount of cash and stock in the system. First, we analyze stability of equilibrium points. Choosing the momentum...