(A)Symmetric Information Bubbles: Experimental Evidence

45 Pages Posted: 5 May 2017

See all articles by Yasushi Asako

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

Hokuriku University

Date Written: 2017-04-01

Abstract

Asymmetric information has been necessary to explain a bubble in past theoretical models. This study experimentally analyzes traders’ choices, with and without asymmetric information, based on the riding-bubble model. We 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. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise, with symmetric information. In contrast, the size of the bubble is stable in a market with asymmetric information.

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

Suggested Citation

Asako, Yasushi and Funaki, Yukihiko and Ueda, Kozo and Uto, Nobuyuki, (A)Symmetric Information Bubbles: Experimental Evidence (2017-04-01). Globalization and Monetary Policy Institute Working Paper No. 312. Available at SSRN: https://ssrn.com/abstract=2962937 or http://dx.doi.org/10.24149/gwp312

Yasushi Asako (Contact Author)

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

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

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

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

Hokuriku University ( email )

Kanazawa
Japan

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