Symmetric Information Bubbles: Experimental Evidence

47 Pages Posted: 17 Jan 2017  

Yasushi Asako

Waseda University

Yukihiko Funaki

Waseda University, School of Political Science and Economics

Kozo Ueda

Waseda University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Nobuyuki Uto

Waseda University

Date Written: December 26, 2016

Abstract

This study experimentally analyses traders’ choices, with and without asymmetric information, based on the riding-bubble model. While asymmetric information has been necessary to explain a bubble in past theoretical models, our experiments show that traders have an incentive to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric information. This finding implies a possibility that information symmetry promotes cooperation. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise, even with symmetric information.

Keywords: riding bubbles, crashes, asymmetric information, experiment, clock game

JEL Classification: C72, D82, D84, E58, G12, G18

Suggested Citation

Asako, Yasushi and Funaki, Yukihiko and Ueda, Kozo and Uto, Nobuyuki, Symmetric Information Bubbles: Experimental Evidence (December 26, 2016). CAMA Working Paper No. 5/2017 . Available at SSRN: https://ssrn.com/abstract=2899958

Yasushi Asako

Waseda University ( email )

Okhubo Campus, Shinjuku-ku, Room 59-416B
Okhubo Campus, Shinjuku-ku, Room 59-416B
tokyo, Tokyo 169-8555
Togo

Yukihiko Funaki

Waseda University, School of Political Science and Economics ( email )

1-6-1 Nishi-Waseda
Shinjuku-ku, Tokyo 169-8050, Tokyo 169-8050
Japan

Kozo Ueda (Contact Author)

Waseda University ( email )

Okhubo Campus, Shinjuku-ku, Room 59-416B
Okhubo Campus, Shinjuku-ku, Room 59-416B
tokyo, Tokyo 169-8555
Togo

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

Nobuyuki Uto

Waseda University ( email )

Okhubo Campus, Shinjuku-ku, Room 59-416B
Okhubo Campus, Shinjuku-ku, Room 59-416B
tokyo, Tokyo 169-8555
Togo

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