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A culture of greed: Bubble formation in experimental asset markets with greedy and non-greedy traders.
Hoyer,Karlijn Zeisberger,Stefan Breugelmans,Seger Zeelenberg,Marcel
Hoyer,Karlijn
Zeisberger,Stefan
Breugelmans,Seger
Zeelenberg,Marcel
Abstract
This study investigates the relationship between the motive of greed and various asset market indicators, such as trading activity and bubble formation (i.e., mispricing, overpricing, and price amplitude). We ran experimental asset markets that allowed us to measure individuals’ greed in order to create markets populated with greedy individuals and markets with non-greedy individuals. Regarding trading activity, we found that greedier individuals had higher trading activity on the individual level but not on the market level. On the market level, high-greed markets exhibited less frequent and smaller price bubbles than markets with less greedy traders. If our findings translate to actual markets, greed itself might not contribute to asset market bubbles.
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Date
2023
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Keywords
Dispositional greed, Experimental finance, Experimental asset markets, Bubbles, Mispricing, G12 - Asset Pricing ; Trading Volume ; Bond Interest Rates, G41 - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
Citation
Hoyer, K, Zeisberger, S, Breugelmans, S & Zeelenberg, M 2023, 'A culture of greed : Bubble formation in experimental asset markets with greedy and non-greedy traders.', Journal of Economic Behavior and Organization, vol. 212, pp. 32-52. https://doi.org/10.1016/j.jebo.2023.05.005
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info:eu-repo/semantics/openAccess