TY - JOUR
T1 - Traders' expectations in asset markets
T2 - Experimental evidence
AU - Haruvy, Ernan
AU - Lahav, Yaron
AU - Noussair, Charles N.
PY - 2007/12
Y1 - 2007/12
N2 - 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 over-estimate 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.
AB - 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 over-estimate 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.
UR - http://www.scopus.com/inward/record.url?scp=38049178223&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=38049178223&partnerID=8YFLogxK
U2 - 10.1257/aer.97.5.1901
DO - 10.1257/aer.97.5.1901
M3 - Article
AN - SCOPUS:38049178223
VL - 97
SP - 1901
EP - 1920
JO - American Economic Review
JF - American Economic Review
SN - 0002-8282
IS - 5
ER -