Heterogeneity of Beliefs and Trading Behavior — A Reexamination

29 Pages Posted: 29 Jun 2022

See all articles by Sascha Füllbrunn

Sascha Füllbrunn

Radboud University Nijmegen - Institute for Management Research

Christoph Huber

WU Vienna University of Economics and Business

Catherine C. Eckel

Texas A&M University

Utz Weitzel

VU University Amsterdam

Date Written: June 13, 2022

Abstract

Combining experimental datasets from seven individual studies, including 255 asset markets with 2,031 participants, and 36,326 short-term price forecasts, we analyze the role of heterogeneity of beliefs in the organization of trading behavior by reproducing and reconsidering earlier experimental findings. Our results confirm prior evidence that price expectations affect trading behavior. However, heterogeneity in beliefs does not seem to drive overpricing and asset market bubbles, as suggested by earlier studies, and we find no indication of short-term beliefs being better determinants of trading behavior than longer-term beliefs.

Keywords: replicability, asset market, price bubble, experimental finance

JEL Classification: C9, D4, E5, G1

Suggested Citation

Füllbrunn, Sascha and Huber, Christoph and Eckel, Catherine C. and Weitzel, Utz, Heterogeneity of Beliefs and Trading Behavior — A Reexamination (June 13, 2022). Available at SSRN: https://ssrn.com/abstract=4141893 or http://dx.doi.org/10.2139/ssrn.4141893

Sascha Füllbrunn

Radboud University Nijmegen - Institute for Management Research ( email )

Heyendaalseweg 141
Nijmegen, 6525 AJ
Netherlands

HOME PAGE: http://www.ru.nl/english/people/fullbrunn-s/

Christoph Huber (Contact Author)

WU Vienna University of Economics and Business ( email )

Welthandelsplatz 1, Building D1, 3rd Floor
Vienna, 1020
Austria

Catherine C. Eckel

Texas A&M University ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Utz Weitzel

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam
Netherlands

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