Relative performance information in asset markets: An experimental approach

Abstract

An important issue in the study of asset market bubbles is the extent to which traders are influenced by their perceived performance relative to other traders. Extant research on laboratory asset market bubbles has generally kept performance information private, effectively excluding such considerations from experimental control. We provide traders in an experimental market with a 15-period finitely lived asset with periodic performance information for one other trader-either the best performer or the worst performer-and find significant effects on both aggregate market measures, such as market prices and boom duration, and individual subjective satisfaction. © 2012 Elsevier B.V.