Again, each student is given a slip of paper with private information regarding the FDA approval decision on the drug. At least three students should get a slip of paper indicating the drug was not approved. An English auction is conducted after the instructor announces that it is illegal for insiders to bid on the stock. Ball, Sheryl B. and Charles A. Holt. Speculation and Bubbles in an Asset Market .
Traders begin with three units of the asset and a trading cash account.
Not every asset survives until the last period. During each period, the instructor acts as auctioneer by soliciting bids and offers. Though the price of the asset should reflect the sum of the expected dividends over the remaining life of the asset, the authors invariably observe an asset bubble that eventually crashes near the end of the 10 periods. An Experiment in Foreign Exchange Markets. The purchase of foreign goods requires students to submit bids for foreign exchange using a second price sealed bid auction.