Traders' Expectations in Asset Markets: Experimental Evidence
Ernan Haruvy, Yaron Lahav and Charles N. Noussair
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| Article Citation |
Haruvy, Ernan, Yaron Lahav, and Charles N. Noussair 2007. "Traders' Expectations in Asset Markets: Experimental Evidence." American Economic Review, 97(5): 1901–1920.
DOI:10.1257/aer.97.5.1901
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| Abstract |
We elicit traders' predictions of future price trajectories in repeated experimental
markets for a 15-period-lived asset. We find that individuals' beliefs about prices are
adaptive, and primarily based on past trends in the current and previous markets in
which they have participated. Most traders do not anticipate market downturns the
first time they participate in a market, and, when experienced, they typically overestimate
the time remaining before market peaks and downturns occur. When prices
deviate from fundamental values, belief data are informative to an observer in predicting
the direction of future price movements and the timing of market peaks. (JEL
C91, D12, D84, G11 )
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| Article Full-Text Access |
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| Additional Materials |
Link to Data Set
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| Authors |
Haruvy, Ernan
Lahav, Yaron
Noussair, Charles N.
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