Traders' expectations in asset markets: Experimental evidence

Ernan Haruvy, Yaron Lahav, Charles N. Noussair

Research output: Contribution to journalArticlepeer-review

176 Scopus citations

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 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.

Original languageEnglish (US)
Pages (from-to)1901-1920
Number of pages20
JournalAmerican Economic Review
Volume97
Issue number5
DOIs
StatePublished - Dec 2007
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'Traders' expectations in asset markets: Experimental evidence'. Together they form a unique fingerprint.

Cite this