Research Seminar MicroeconomicsWho inflates the bubble? Analysts and traders in experimental asset marketsJohann Graf Lambsdorff (U Passau)
21 December 2017
The Microeconomics Research Seminar welcomes
Johann Graf Lambsdorff (U Passau),
who will present his work on
"Who inflates the bubble? Analysts and traders in experimental asset markets".
Place: Room 0029, Von-Melle-Park 5
Hour: 17:15 - 18:45
We are looking forward to seeing you there!
Abstract:
We study how the division of labour between analysts and traders contributes to mispricing in experimental asset markets. In our design, analysts are given some information on dividends from which they can estimate an asset’s fundamental value. Based on this, they send a price estimate to their traders. The traders buy and sell assets in repeated double auctions. We find a strong convergence towards fundamental values in a baseline, in which a single participant plays both roles. In treatments with a division of labour, some mispricing is obtained when profits are shared between analyst and trader. When analysts profit from accurate estimates rather than trades, the largest mispricing is found. Our findings are informative for financial stability and regulatory policy.