Learning from unrealized versus realized prices

Kathleen Ngangoue and Georg Weizsäcker

Our market experiment investigates the extent to which traders learn from the price, differentiating between situations where orders are submitted before versus after the price has realized. When market participants have to submit their bids conditional on the price, they show a bias by reacting only to their private information and not to the hypothetical value of the price. In a sequential trading mechanism, where the price is known at the bid submission, bids react to price to an extent that is roughly consistent with the benchmark theory.

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Year of publication:	2015
Authors:	Ngangoue, Kathleen ; Weizsäcker, Georg
Publisher:	Berlin : DIW
Subject:	Naive Expectations \| Asymmetric Information \| Rational Expectations \| Sequential Markets \| Rationale Erwartung \| Rational expectations \| Asymmetrische Information \| Asymmetric information \| Theorie \| Theory \| Erwartungsbildung \| Expectation formation \| Lernprozess \| Learning process