Laboratory Incentive Structure and Control-Test Design in an Experimental Asset Market
Posted: 21 Sep 2009
Date Written: October 16, 2000
This paper presents the results of a series of experiments in a simulated double-auction stock market driven by orders. It is shown that two small groups of traders should adopt a similar behavior when subjected to identical stimuli in the laboratory. To achieve this homogenous behavior, it is necessary to propose an incentive structure according to the rules of the Induced Value Theory proposed by Smith. The data collected in this experiment clearly show, after a series of co-integration tests and non-parametric tests, that experimental protocols of `control-test' design should be successfully used in experimental finance.
Keywords: Induced value theory, Behavior, Double-auction, Design of experiment, Experimental asset market, Test-reference protocol
JEL Classification: C92, B40
Suggested Citation: Suggested Citation