BUBBLES AND EXPERIENCE: AN EXPERIMENT ON SPECULATION

Martin DUFWENBERG (Stockholm University)
Tobias LINDQVIST (Stockholm University)
Evan MOORE (Virginia Polytechnic Institute)

We investigate experimentally how the share of experienced traders in double-auction asset market affects trading, in particular the occurrence of bubble-crash pricing patterns. In each session, six subjects trade in three successive market rounds and gain experience. In a fourth round, depending on the treatment, two or four experienced subjects are replaced by inexperienced subjects. The results are compared to earlier findings when all traders were either inexperienced or experienced.