bubbles and experience an experiment we investigate the occurrence of bubble crash pricing patterns in laboratory financial markets with a mixture of experienced and inexperienced traders we find that even with a minority of experienced traders bubbles are substantially abated

estimating the extent of potential competition in the korean mobile telecommunications market switching costs and number portability abstract number portability service in the mobile communications market is believed to play an important role in lowering the switching costs which can increase the level of competition among providers the aim of this study was to estimate the switching costs and consumers valuation of the number portability service in the korean mobile communications market using conjoint analysis and the stated preference approach the analysis showed that the switching costs have been lowered considerably since number portability has been in force however a significant level of switching costs still remains despite number portability finally this paper provides some implications for the competition strategy in the mobile communications market

are price limits really bad for equity markets despite widely documented criticisms price limit rules are present in many equity markets around the world using a game theoretic model we argue that if the cost of monitoring a market is high price limit rules are beneficial empirical tests based on a cross section of 43 equity markets across five continents support our theoretical prediction we find that the probability of the existence of price limit rules is greater in markets that incur higher monitoring costs due to poorer business disclosure more corruption and less efficiency in legal regulatory and technological environments

peer effects and risk sharing in experimental asset markets abstract we investigate the effect of introducing information about peer portfolios in an experimental arrow debreu economy confirming the prediction of a general equilibrium model with inequality averse preferences we find that peer information leads to reduced variation in payoffs within peer groups information also improves risk sharing as the data suggests that experiencing earnings deviations from peers induces a shift to more balanced portfolios in a treatment where we highlight the highest earner we observe a reduction in risk sharing while highlighting the lowest earner has no effects compared to providing neutral information our results indicate that the presence of social information and its framing is an important determinant of equilibrium in financial markets

the impact of different incentive schemes on asset prices abstract how people are incentivized is one of the main drivers of how they behave in laboratory asset markets we evaluate the impact of four trader incentive bonus bonus with cap linear and penalty on asset prices and trader behavior we find that i an asset with identical expected dividend shows price levels which differ by more than 100 percent depending on the incentive scheme subjects face in particular prices of markets populated by subjects with bonus incentives show the highest prices whereas those with penalty like incentivized subjects exhibit the lowest ii however subjects act approximately rational as different incentives generate different optimal price levels iii in markets where different subjects have different incentive schemes we find that those with bonus incentives exhibit a riskier investment behavior and prefer the riskier asset whereas subjects with penalty incentives invest conservatively and mainly hold cash since we find no difference in risk attitude of subjects prior to the experiment differences in investment behavior are induced by the applied incentives our results highlight that incentives on financial markets have a huge impact on asset prices and investment behavior

cellular telephones in the israeli market the demand the choice of provider and potential revenues this study presents the methodology the estimates and a scenario for forecasting the demand for cellular telephones and their use in israel the analysis was based on the integration of three sub models the estimate of the consumer s decision on whether to purchase a cellular telephone and what type was obtained by using a discrete choice model of the multinomial logit type the total number of cellular telephone purchases to be made in israel during the years 1998 2008 was estimated using a logistic growth model employing aggregate data over time the anticipated demand for airtime was based on findings of a survey carried out on a national sample and on actual usage data on the various consumers during the years prior to the survey the research shows the substantial economic potential of israel s cellular telephone market

thar she bursts reducing confusion reduces bubbles to explore why bubbles frequently emerge in the experimental asset market model of smith suchanek and williams 1988 we vary the fundamental value process constant or declining and the cash to asset value ratio constant or increasing we observe high mispricing in treatments with a declining fundamental value while overvaluation emerges when coupled with an increasing c a ratio a questionnaire reveals that the declining fundamental value process confuses subjects as they expect the fundamental value to stay constant running the experiment with a different context stocks of a depletable gold mine instead of stocks significantly reduces mispricing and overvaluation as it reduces confusion jel c91 d14 g11 g12

probability judgment error and speculation in laboratory asset market bubbles in 12 sessions conducted in a typical bubble generating experimental environment we design a pair of assets that can detect both irrationality and speculative behavior the specific form of irrationality we investigate is the probability judgment error associated with lowprobability high payoff outcomes independently we test for speculation by comparing prices of identically paying assets in multiperiod versus single period markets we establish that aggregate irrationality measured in one dimension probability judgment error is associated with aggregate irrationality measured in another bubble formation

bubbles crashes and endogenous expectations in experimental spot asset markets1 spot asset trading is studied in an environment in which all investors receive the same dividend from a known probability distribution at the end of each of t 15 or 30 trading periods fourteen of twenty two experiments exhibit price bubbles followed by crashes relative to intrinsic dividend value when traders are experienced this reduces but does not eliminate the probability of a bubble the regression of changes in mean price on lagged excess bids number of bids minus the number of offers in the previous period p pt a f b 1 o l supports the hypothesis that a e d the one period expected value of the dividend and that f 0 where excess bids is a surrogate measure of excess demand arising from homegrown capital gains losses expectations thus when bt 1 o goes to zero we have convergence to rational expectations in the sense of fama 1970 that arbitrage becomes unprofitable the observed bubble phenomenon can also be interpreted as a form of temporary myopia tirole 1982 from which agents learn that capital gains expectations are only temporarily sustainable ultimately inducing common expectations or priors tirole 1982 four of twenty six experiments all using experienced subjects yield outcomes that appear to the chart s eye to converge early to rational expectations although even in these cases we get 0 and small price fluctuations of a few cents that invite scalping

an assessment of proposed energy resource tax reform in russia a static general equilibrium analysis abstract a large part of government revenues in russia comes from royalties and export taxes on crude oil oil products and gas recently the russian government has considered reducing export taxes on crude oil and oil products compensated by an increase in the royalty on crude oil the objective of the paper is to analyse the economy wide effects of this proposal moreover a hypothetical replacement of export taxes and royalties with a pure rent tax is analysed a static single country multi sector computable generation equilibrium cge model is employed the primary findings are as follows a replacement of export taxes on crude oil and oil products with a royalty on crude oil provides substantial allocative efficiency gains but this policy is not a superior one welfare could be substantially improved when the export taxes and royalty are replaced with a pure rent tax that can be implemented in the form of a cash flow tax on the negative side reducing export taxes on crude oil and oil products results in a strong appreciation of the currency as a result domestic producers become less competitive in domestic markets and there is a massive increase in import demand

traders expectations in asset markets experimental evidence 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

applying conjoint analysis in economic evaluations an application to menorrhagia the increased demand for health care coupled with limited resources means that decisions have to be made concerning the allocation of scarce health care resources this paper considers how conjoint analysis ca can be used to aid this decision making process it is shown how the technique can be used to estimate marginal rates of substitution between attributes willingness to pay wtp if cost is included as an attribute and overall utility scores for different ways of providing a service the technique is applied to consider women s preferences for two surgical procedures in the treatment of menorrhagia hysterectomy and conservative surgery the results suggest conservative surgery is preferred to hysterectomy as indicated by higher utility scores for the former and a marginal wtp of 7593 to have conservative surgery rather than hysterectomy the internal validity of ca was also shown it is concluded that ca is a potentially useful instrument for policy makers however numerous methodological iss

classroom games speculation and bubbles in an asset market this paper describes a classroom exercise in which students trade assets of uncertain value in a sequence of market periods assets pay one dollar dividends at the end of each period but once the dividend is paid there is fixed probability that the asset will be destroyed dividends and probabilities are chosen so that the fundamental value is constant over time speculative bubbles can be caused by divergent expectations about other traders valuations of the asset this exercise provides an interactive framework that facilitates discussions of discounting rational expectations and backward induction

the impact of resource tax reform on china s coal industry abstract contributing to approximately two thirds of primary energy consumption coal usage is the focus of china s energy policies to regulate the resource taxation system and reduce the burden of coal enterprises the chinese government launched a reform of its resource tax system in 2014 for coal introducing the ad valorem system to replace the volume based system that had been in place for the preceding thirty years to assess the impact of the tax reform this paper constructs two stage dynamic game models by taking the coal and coal fired power industries as the players the market situations of shortage and oversupply are investigated separately empirical data are collected to estimate the model parameters for numerical simulations the model results suggest that the tax reform will reduce both coal prices and the coal industry profitability if the tax levied on each ton of coal is maintained at the same level as before the reform regardless of whether the market is in a shortage or an oversupply situation however the increased buyer s power will amplify the effect of the tax reform the numerical simulations also provide an estimation of the tax rate of the ad valorem system that maintains the profit of the coal industry considering the demand and supply situations in china s coal market policy recommendations are provided to guide further reform of china s resource tax system

price bubbles and crashes in experimental call markets abstract price bubbles relative to intrinsic dividend value are observed using a call market trading institution market prices tend to track intrinsic value only when the same group of highly experienced traders participate in three consecutive 15 round markets

how are derivatives used evidence from the mutual fund industry we investigate investment managers use of derivatives by comparing return distributions for equity mutual funds that use and do not use derivatives in contrast to public perception derivative users have risk exposure and return performance that are similar to nonusers we also analyze changes in fund risk in response to prior fund performance changes in risk are substantially less severe for funds using derivatives consistent with the explanation that managers use derivatives to reduce the impact of performance on risk we provide new evidence regarding the implications of cash flows and managerial gaming for the relation between performance and risk

residential broadband subscription demand an econometric analysis of australian choice experiment data the recent roll out of fibre optic cable suggests that the willingness of households in passed communities to subscribe to networked services is an important issue this paper studies the determination of the demand for network subscription through a discrete choice model the effect of installation and rental price on the likelihood of subscription is analysed the logit regression is based on choice experiment stated preference subscription data obtained from a national survey of households limitations of this preliminary work and suggestions for future research are discussed

costly search and mutual fund flows this paper studies the flows of funds into and out of equity mutual funds consumers base their fund purchase decisions on prior performance information but do so asymmetrically investing disproportionately more in funds that performed very well the prior period search costs seem to be an important determinant of fund flows high performance appears to be most salient for funds that exert higher marketing effort as measured by higher fees flows are directly related to the size of the fund s complex as well as the current media attention received by the fund which lower consumers search costs

digital options and efficiency in experimental asset markets abstract in asset markets extraordinary price run ups bubbles followed by crashes back to levels closer to fundamental values have been shown to adversely affect the real economy leading to inefficient resource allocation and underinvestment conversely derivative markets contribute to price discovery and lead to informationally more efficient prices in the market for the underlying asset we combine these observations and test experimentally whether digital options a type of derivative that has recently been introduced to a wider audience via online prediction markets can reduce price bubbles in a laboratory setting we find that subjects do not use the derivative market to improve their expectations of future asset prices and analyze this result

relative performance incentives and price bubbles in experimental asset markets we study experimental markets in which participants face incentives modeled upon those prevailing in markets for managed funds each participant s portfolio is periodically evaluated at market value and ranked by relative performance as measured by short term paper returns those who rank highly attract a larger share of new fund inflows in an environment in which prices are typically close to intrinsic value the effect of these incentives is mild however in an environment in which markets are prone to bubble mispricing is greatly exacerbated by relative performance incentives and becomes even more pronounced with experience

beyond mobile number portability measuring consumer preferences for service portability in japan s mobile phone market japan s mobile phone market has been oligopolized by three incumbents who are seeking vertically integrated business models which may prevent competitors from using platform layers to provide original services we conduct two types of conjoint analysis to measure consumer stated preferences and draw two main conclusions from the analyses first the average consumer is willing to pay more than jpy 2000 us 20 to increase mobile service portability second the average consumer s willingness to pay corresponds to jpy 100 200 us 1 2 per song for securing music download platforms a dilemma exists in consumer preferences for service portability in japan s mobile phone market namely the choice between free mobile service portability and convenient music download platforms

consumers preferences for the attributes of post pc results of a contingent ranking study with the explosive growth of the internet and the change in consumer demand post pc is emerging as a substitute for the existing desktop pc and laptop pc post pc is a new computer which is portable with wireless networking cheaper than the existing pc and specializing in the specific functions that consumers want rudimentary post pcs such as pda web pad and smart phone are already in use in the future owing to technological progress the heterogeneity of related companies and the low entry barrier various post pcs will be developed this paper attempts to analyse consumers willingness to pay wtp for post pc with such attributes as portability cpu speed data input method using key board or electric pen monitor size and price to this end a contingent ranking method is applied which makes the respondents rank hypothetical post pc alternatives featuring various combinations of attributes via a survey data collected in korea using the estimated wtp the shape and the capacity of future po

to see is to believe common expectations in experimental asset markets abstract we experimentally manipulate agents information regarding the rationality of others in a setting in which previous studies have found irrationality to be present namely the asset market experiments introduced by smith et al 1988 recent studies suggest that mispricing in such markets may be an artefact of confusion which can be reduced by training subjects to understand the diminishing fundamental value we reconsider this view and propose that when it is made public knowledge that training has occurred this may also reduce uncertainty over the behavior of others and facilitate the formation of common expectations our design disentangles the direct effect of training from the indirect effect of its public knowledge and our results demonstrate a distinct and statistically significant effect of public knowledge over and above that of training alone

experience and confidence in an internet based asset market experiment the experience effect in asset markets is one that was thought to be settled as subjects gained experience with the interface and each other they typically exhibit fewer instances of mispricing and at lower magnitudes but questions regarding trading experience are not easy to address in the lab with the typical subject pool since the kind of experience one can typically generate in the lab is experience with the experimental environment itself not with external environments however in virtual worlds asset markets are highly evolved providing a subject pool with skilled and experienced traders that can be accessed via the internet this study compares experimental asset markets with participants recruited from virtual world trading groups to experimental markets with participants recruited from the virtual world at large i further examine trader performance and trading behavior within markets the findings indicate that asset markets with virtual world participants recruited from trading groups are more prone to exhibit bubbles than are markets with virtual world participants recruited at large within condition experienced traders are less likely to follow fundamentals and more likely to engage in strategies that result in loss of earnings excess confidence is rejected as an explanation for this pattern as confidence is found to be related to higher earnings and fundamental value trading strategies

social status and economic performance a survey abstract this survey combines ideas and results from sociology and economics recognizing that economic decisions are often shaped by social concerns and influences based on the sociological literature we define social status and describe its measurement we then describe the role of social status in economic analysis of saving and consumption wages and economic growth we review recent work on status determination in equilibrium including evolutionary models we conclude with some remarks on the need for further interaction between sociology and economics

conjoint analysis of demand for ip telephony the case of japan with the recent diffusion of broadband bb services internet protocol ip telephony is expected to spread significantly in japan this article investigates the demand for ip telephony by using conjoint analysis projecting ip telephony demand also contributes to japanese info communication policy discussions two points are made first ip telephony is still currently considered an optional supplement or an add on service option of high speed bb internet access services in japan rather than a close substitute of existing plain old telephone service pots at this point we find little evidence that many households will promptly forsake their fixed line service for ip telephony second we conclude that the key condition for the proliferation of ip telephony is the complete guarantee of quality of service qos including voice quality number portability fax usage and emergency access comparable to or exceeding that of existing pots

an assessment of optimal gas pricing in russia a cge approach domestic gas prices in russia are administratively regulated and they are substantially lower than export netback prices the administrative price regulation operates as an implicit subsidy on domestic gas consumption the russian government aims to liberalise domestic wholesale gas prices in the long term while the export netback parity is defined as a political objective it seems not to be a necessary target anymore the export netback parity is not economically rational for russia because the average export netback price of gas is higher than the marginal cost due to gazprom s market power in export gas markets an optimal domestic gas price is still not well defined this paper addresses this question by employing a comparative static single country multi sector computable generation equilibrium model cge the administrative regulation of domestic gas prices is explicitly modelled the main findings are as follows an increase in the domestic gas price provides economic efficiency gains the more elastic the export and domestic demand for gas the larger the welfare gains the optimal domestic gas price should be approximately 55 of the export netback price increasing the domestic gas price provides additional government revenues which can be used to reduce distortionary taxes on sectoral effects the structure of the russian economy shifts from energy toward non energy intensive sectors in response to an increase in the domestic gas price there is an increase in the export supply of gas furthermore an increase in the domestic gas price leads to a reduction in total co2 emissions

economy wide effects of international and russia s climate policies abstract the objectives of this paper are to analyse the economy wide effects of international climate policy on the russian economy as well as the effects of russia s climate policy on european economies our analysis is based on a general equilibrium model that includes inertias such as imperfect sectoral labour mobility and vintage capital and has a detailed depiction of the power generation sector we found that international climate policy could reduce russia s private welfare by 1 8 annually due to lower revenues from exports of fossil fuels at the sectoral level russia could gain a comparative advantage in producing energy intensive commodities and hence russia s producers of those commodities increase their production and export supplies this could result in a carbon leakage in russia eliminating implicit subsidies on domestic consumption of gas and petroleum products could reduce russia s private welfare loss by 0 6 points and eliminate the carbon leakage nevertheless eliminating implicit subsidies on gas and petroleum products might not be sufficient to achieve the pledged emission reductions by 2030 moreover this leads to an undesirable increase in coal consumption and therefore some additional climate policy such as a carbon tax or an emission trading system might be required we also found that russia s climate policy could have positive but moderate effects on the european economies in particular countries such as lithuania slovakia and hungary benefit due to decreased export prices for gas crude oil and petroleum products from russia

of tournaments and temptations an analysis of managerial incentives in the mutual fund industry we test the hypothesis that when their compensation is linked to relative performance managers of investment portfolios likely to end up as losers will manipulate fund risk differently than those managing portfolios likely to be winners an empirical investigation of the performance of 334 growth oriented mutual funds during 1976 to 1991 demonstrates that mid year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid year winners furthermore we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time

irrationality and beliefs in a laboratory asset market is it me or is it you abstract this paper reports on an experiment designed to examine individual and market outcomes with a mixture of rational and non rational traders using values elicited via auctions we measure a specific form of irrationality the tendency to overweight high payoff low probability events or probability judgment error subjects are classified by their tendency to exhibit errors as well as their beliefs regarding whether others will make errors subjects then participate in a series of double auction markets the results indicate that both probability judgment error and beliefs about other subjects susceptibility to probability judgment error have significant impact on individual and market outcomes

boundaries of the tournament pricing effect in asset markets evidence from experimental markets 1 introduction when traders in experimental asset markets are compensated according to a tournament contract a salary plus bonus scheme in which a trader s bonus is proportional to the amount by which that trader exceeds the average performance in that market we observe violation of convergence results obtained in experiments that did not use such compensation schemes this effect of tournament incentives has been documented by james and isaac 2000 in this paper we search for what smith and williams 1990 have termed the boundaries of falsification for the proposition that tournament contracts affect asset market prices specifically we examine the robustness of the tournament pricing effect on market prices on several fronts first we ask whether the pricing effect survives when not all traders are being compensated according to the beat the market contract second we ask whether the tournament pricing effect is robust with respect to perturbations in the trader s compensation contract third we ask whether the pricing effect is observed in two period asset life markets hereafter 2 p a l markets as it is in 15 period asset life markets hereafter 15 p a l markets 1 section 2 presents the background of the current experiments the research conjectures and the experimental design the experimental results are contained in section 3 section 4 discusses a phenomenon that we had not encountered until these experiments section 5 offers the conclusions and thoughts for further reflection 2 conjectures and experimental design background james and isaac 2000 was the first paper to assess the effect on asset market prices of tournament contracts imposed at the individual level this is distinct from an earlier paper by brown harlow and starks 1996 that examines how individual portfolio managers allocation decisions change in response to such contracts but that does not address the issue of any effects on prices of the assets the portfolio managers are trading brown harlow and starks is itself a specific application of a wider literature on using tournament contracts to address principal agent conflicts see also nalebuff and stiglitz 1983 bull schotter and weigelt 1987 and ehrenburg and bognanno 1990 the issue of the effect on market prices is arguably the most important one surrounding the imposition of tournament contracts on portfolio managers because it is these capital market prices that help allocate savings to different forms of investment naturally misleading capital market prices can potentially lead to catastrophically misdirected capital spending 2 this key aspect of james and isaac that it addresses the effect at the market level of using tournament incentives at the individual level is also present in this paper the research objective of this paper is to document the eventual market level ramifications of varying the use of tournament contracts the nature of those variations will be discussed here the effect of tournament incentives on asset market prices prior to this paper it has been established that the way in which traders in experimental asset markets are compensated on an individual basis can significantly change the prices that eventuate at the market level in a seminal paper on experimental asset markets smith suchanek and williams 1988 hereafter ssw find that as groups of traders were called back for repeat sessions of a 15 p a l market which can be viewed as an experimental implementation of the theoretical market analyzed by tirole 1982 the market price of the asset bubbled less in each successive 15 period asset market this suggests that the no trading common expectations equilibrium derived by tirole might be reached eventually but requires experience on the part of the pool of traders of note in ssw the traders are compensated such that an experimental dollar corresponds to a u s dollar that is the traders respective experimental dollar holdings deriving variously from cash endowments dividend payments and capital gains are translated one for one into u

structural reliability of conjoint measurement in health care an empirical investigation this paper is concerned with the structural reliability of conjoint measurement when applied in a health care setting the clinical context was the diagnosis and treatment of knee injuries a conjoint measurement study was conducted which used the pairwise choice approach to preference elicitation each choice included two scenarios a conventional treatment approach to management arthroscopy and an approach using magnetic resonance imaging in order to test for structural reliability two separate conjoint measurement exercises were conducted exercise a where scenarios were defined in terms of three attributes and exercise b where scenarios included all four attributes the assessment of structural reliability involved a comparison of two random effects probit models for exercises a and b data were collected on a total of 176 students of sports science the results strongly indicate that the models for the two exercises are different although the instability is limited to the constant term and a sin

the public value of improving a weather forecasting system in korea a choice experiment study abstractthe korean government plans to improve the quality of its weather forecasting system in order to increase its public utility the benefits arising from the implementation of this plan shoul

economic and welfare influences of an energy excise tax in jiangsu province of china a computable general equilibrium approach abstract in recent years although china s energy intensity has gradually decreased the total consumption of energy commodities has increased sharply levying an excise tax on energy commodities is one of the keys to control energy consumption this paper constructed a computable general equilibrium model to simulate levying an energy excise tax in jiangsu province which is one of china s strong economic provinces with lower endowments of energy resources the results show that the energy excise tax is beneficial for energy saving while levying energy will cause economic and welfare declines when at a level tax rate of 5 10 and 15 the loss of gdp will reach 0 27 0 66 and 1 13 respectively and the incomes of inhabitants and enterprises alike will decrease when the energy tax revenue used to compensate for the welfare losses suffered by inhabitants or enterprises there is a double dividend effect energy saving and increasing income moreover the simulation indicated that a 5 improvement of energy efficiency brings about a backfire phenomenon with an increase of 142 in energy consumption however when considering the cost of energy efficiency improvements the rebound effect will be significantly decreased policy suggestions are further recommended to help improve the energy policy in regard to reducing energy consumption

short selling constraints as cause for price distortions an experimental study in this paper we explore the influence of the possibility to short stocks and or borrow money in laboratory markets a key innovation of our study is that subjects can simultaneously trade two risky assets on two double auction markets allowing us to differentiate between assets with relatively high versus low capitalization divergence of opinions is created by providing each trader with noisy information on the intrinsic values of both assets we find that when borrowing money or shorting stocks is restricted prices are systematically distorted specifically stocks with high low capitalization are traded at lower higher prices than their fundamental value lifting the restrictions leads to more efficient prices and more liquidity thereby also lowering volatility and bid ask spreads

the effect of short selling on bubbles and crashes in experimental spot asset markets a series of experiments illustrate that relaxing short selling constraints lowers prices in experimental asset markets but does not induce prices to track fundamentals we argue that prices in experimental asset markets are influenced by restrictions on short selling capacity and limits on the cash available for purchases restrictions on short sales in the form of cash reserve requirements and quantity limits on short positions behave in a similar manner a simulation model based on delong et al 1990 generates average price patterns that are similar to the observed data asset market bubbles are persistent deviations of prices from fundamentals to the extent that bubbles exist they can influence investment levels and the allocation of capital and thereby have considerable economic effects in recognition of their potential importance the question of the existence and pervasiveness of bubbles has been a focus of extensive empirical investigation see e g shiller 1981 blanchard and watson 1982 diba and grossman 1988 and west 1988 these studies yield mixed results regarding the empirical relevance of bubble phenomena one source of the differences in conclusions may be that because the fundamental value of the assets cannot be observed tests of the presence of bubbles are joint tests with the particular specification of the process guiding the evolution of fundamentals also being tested the availability of short selling is widely believed to make bubble formation less likely one rationale for such a belief is the notion that the cause of asset market bubbles is a constraint on the ability of traders to speculate on future downward price movements see e g miller 1977 jarrow 1980 diamond and verrecchia 1987 or figlewski and webb 1993 in the absence of short sales traders may sell only the shares in their portfolios the availability of short sales relaxes this constraint in this paper we study empirically the effect of allowing short sales on both the incidence and magnitude of market bubbles we choose a setting in which the fundamental value of the asset is clearly and unambiguously defined and known at all times and bubbles typically occur namely we use the experimental environment that smith suchanek and williams 1988 introduce while

on the ingredients for bubble formation informed traders and communication bubbles in asset markets have been documented in numerous experiments most experiments in which bubbles occur feature a declining fundamental value this feature has been criticized for being atypical of real financial markets here we experimentally study other ingredients for bubble formation that are common in such markets namely the existence of inside information and communication among traders we find that bubbles and mirages can occur if these additional ingredients are present in particular the mere possibility that some traders are better informed than others can create bubbles surprisingly communication turns out to be counterproductive for bubble formation

nonspeculative bubbles in experimental asset markets lack of common knowledge of rationality vs actual irrationality we report the results of an experiment designed to study the role of speculation in the formation of bubbles and crashes in laboratory asset markets in a setting in which speculation is not possible bubbles and crashes are observed the results suggest that the departures from fundamental values are not caused by the lack of common knowledge of rationality leading to speculation but rather by behavior that itself exhibits elements of irrationality much of the trading activity that accompanies bubble formation in markets where speculation is possible is due to the fact that there is no other activity available for participants in the experiment

margin short selling and lotteries in experimental asset markets the robustness of bubbles and crashes in markets for assets with finite lives is perplexing this paper reports the results of experimental asset markets in which participants trade two assets in some markets price bubbles form in these markets traders pay higher prices for the asset with lottery characteristics i e a claim on a large unlikely payoff however institutional design has a significant impact on deviations in prices from fundamental values particularly for an asset with lottery characteristics price run ups and crashes are moderated when traders finance purchases of the assets themselves and are allowed to short sell

futures contracting and dividend uncertainty in experimental asset markets prices in experimental asset markets tend to bubble and then crash to dividend value at the end of the asset s useful life explanations for this phenomenon are 1 that participants cannot form reliable future price expectations or 2 dividend risk aversion we report the results of experiments to test these hypotheses in one experimental series a futures market is introduced so that participants can obtain information on future share prices in another series of experiments the per period dividend is known with certainty the futures market treatment reduced the bubble the certain dividend treatment had little effect on the character of bubbles with inexperienced traders copyright 1995 by university of chicago press

is cultural heritage really important for tourists a contingent rating study in this article we present the results of a contingent rating study carried out on a sample of tourisits visiting scicli a sicilian town known for its baroque heritage in particular we focus on different attributes of tourism products namely season accommodation and cultural heritage to study how much each of these attributes weights in tourists preferences we also study how the socio demographic characteristics of people affect their evaluation of the different attributes of tourism products the heritage endowment appears to be far from being the most important factor this result is consistent across different socio demographic subgroups of interviewed persons

the effect of reliability content and timing of public announcements on asset trading behavior financial markets are overwhelmed by daily announcements we use experimental asset markets to assess the impact of releasing public messages with different levels of reliability on asset prices subjects receive qualitative announcements in predetermined trading periods that are either preset by the experimenter randomly selected or determined by past asset market prices we find that messages can play a significant role in bubble abatement or rekindling the preset message the price is too high decreases the amplitude and duration of bubbles for inexperienced subjects announcements that depend on the actual level of mispricing reduce bubble magnitude meanwhile a preset or random message the price is too low prevents experienced subjects from abating bubbles we account for the effect of public messages by showing that they significantly reduce inconsistent irrational trading behavior

differentiated assets an experimental study on bubbles i introduction the bubble and crash phenomenon in experimental asset markets first reported in smith suchanek and williams 1988 has been shown to be rather robust to various manipulations in the experimental design see e g king et al 1993 porter and smith 1995 van boening williams and lamaster 1993 1 in all these markets an asset with a life of 15 or 30 periods is traded the asset pays a common dividend to all holders at the end of each trading period and the dividend structure is common knowledge to all traders rather than tracking the fundamental value which is derived from the expected dividend for the number of periods remaining prices tend to exhibit a prolonged boom and crash pattern in a vast majority of the markets studied in the literature note that the bubble and crash phenomenon has also been observed in a setting where two assets are traded in two separate double auction markets simultaneously fisher and kelly 2000 study rate of return parity in such an environment the main treatment variable that they consider is the expected dividends of the assets in some treatments the two assets pay exactly the same expected dividend whereas in some others one asset pays twice as much they find that bubbles not only exist in both markets but also positively correlate with each other childs and mestelman 2006 manipulate the expected dividend as well as the variance of the dividends their findings are consistent with fisher and kelly s in that bubbles occur in both markets and that rate of return parity receives less support as the assets become more differentiated the main objective of this paper is to continue the research line initiated by fisher and kelly 2000 and investigate if and how differences in assets characteristics affect investors trading strategies and as a result the magnitude of bubbles motivated by empirical evidence which suggests that bond markets are in general less susceptible to the dramatic boom and crash price pattern we first construct a bond market like laboratory environment where investors are free to trade assets that can be differentiated not only from their dividend payments but also from their maturity periods 2 the research questions we ask are as follows does the existence of multiple assets that can be differentiated from their dividends and or maturities help reduce mispricing and if so why to tackle these questions we adopt a 2 x 2 design in which an asset called x has a 30 period life duration and pays on average 7 francs per period as a dividend these intrinsic characteristics are fixed in all treatments the characteristics of an alternative asset called y on the other hand vary depending on the treatment it pays either the same expected dividend as x or twice as much in terms of its life duration it lasts either 30 or 15 periods as a result we have the following four treatments for this set of the experiment sdursdiv baseline sdurddiv ddursdiv and ddurddiv where s d dur and div stand for same different duration and dividend respectively if we assume that traders have common and rational expectations we would expect prices to follow fundamental values in both markets but since the evidence of the bubble and crash phenomenon is so overwhelming in the literature we feel that evaluating a hypothesis of no bubbles is a bit insensitive instead we propose the following hypothesis for evaluation hypothesis 1 price deviations from the fundamental in either x or y market do not depend on if and how the two assets are intrinsically different we also evaluate the relative price between the two assets against the prediction of rate of return parity as in fisher and kelly 2000 and childs and mestelman 2006 the null hypothesis that we advance for evaluation is stated as follows hypothesis 2 deviations from the prediction of rate of return parity do not depend on if and how the two assets are intrinsically different

thar she blows can bubbles be rekindled with experienced subjects we report 28 new experiment sessions consisting of up to three experience levels to examine the robustness of learning and error elimination among participants in a laboratory asset market and its effect on price bubbles our answer to the title question is yes we impose a large increase in liquidity and dividend uncertainty to shock the environment of experienced subjects who have converged to equilibrium and this treatment rekindles a bubble however in replications of that same challenging environment across three experience levels we discover that the environment yields a rare residual tendency to bubble even in the third experience session therefore a caveat must be placed on the effect of twice experienced subjects in asset markets in order for price bubbles to be extinguished the environment in which the participants engage in exchange must be stationary and bounded by a range of parameters experience including possible error elimination is not robust to major new environment changes in determining the characteristics of a price bubble jel c91 d83

a review of bubbles and crashes in experimental asset markets this paper discusses the literature on bubbles and crashes in the most commonly used experimental asset market design introduced by smith et al it documents the main findings based on the results from 41 published papers 3 book chapters and 20 working papers

how does tax system on energy industries affect energy demand co2 emissions and economy in china abstract energy savings and co2 emission reduction have become a major issue in recent years taxes on energy production sectors may be an effective way to save energy reduce co2 emissions and improve environmental quality this paper constructs a dynamic recursive computable general equilibrium cge model to analyze the impact of the energy tax on energy economy and environment from the perspective of tax rates and tax forms specific tax and ad valorem tax the results show that adjusting the tax system and the tax rate has important implications for energy conservation while having minor impacts on the output of other industries the impact of an increasing energy tax on the energy demand is greater than the impact on sectoral output indicating that energy efficiency will be increased to some extent the co2 reduction will increase over time when an ad valorem tax is implemented on enterprises we found that ad valorem tax has greater elasticity of economic output energy demand and co2 emission reduction the results support the direction of china s resource tax reform however we argue that it is better to increase the tax rate relatively and relax the control on energy prices so that energy efficiency will increase