47 Pages Posted: 17 Jan 2017
Date Written: December 26, 2016
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: 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