In twelve sessions conducted in a typical bubble-generating experimental environment, we design a pair of assets that can detect both irrationality and speculative behavior. The specific form of irrationality we investigate is probability judgment error associated with low-probability,...

We measure the correlations between two cities’ real GDP growth rates (a measure of business cycle correlations) to capture the degree of segmentation across China’s provincial and regional borders. This type of segmentation can be caused by local protectionism as well as other...

Whether natural resources boost or deter economic development remains an open question in the literature. Papyrakis and Gerlagh (2007) found a significant negative association between economic growth and resource abundance at a U.S.-state level. They demonstrated that resource abundance crowds...

This paper analyzes the effect of circuit breakers on price behavior, trading volume, and profit-making ability in a market setting. We conduct nine experimental asset markets to compare behavior across three regulatory regimes: market closure, temporary halt, and no interruption. The presence...

Empirical evidence suggests that prices do not always reflect fundamental values and individual behavior is often inconsistent with rational expectations theory. We report the results of fourteen experimental markets designed to examine whether the interactive effect of subject pool and design...

The Federal Reserve has made significant changes in its predisposition to release information over time. This paper reports the results of experimental asset markets designed to investigate how the public disclosure of uncertain information affects market and individual outcomes. In one set of...

This paper reports the results of two experiments, each consisting of six sessions, designed to investigate difficulties that arise in estimating expected litigation costs in an auditing game. In each experimental session, the game consists of a series of periods in which sellers submit sealed...

In this paper we use a simultaneous equations model to examine the relationship between analysts' forecasting decisions and institutions' investment decisions. Neglecting their interaction results in model misspecification. We find that analysts' optimism concerning a firm's earnings responds...

This study investigates disclosure behavior when a manager has incentives to influence the actions of a product market competitor in a Cournot duopoly. Theoretical research suggests that under various conditions the manager has incentives to withhold some signals and disclose others. Using an...

This paper reports the results of 15 experimental asset markets designed to investigate the effect of optimistic forecast bias on market behavior. Each market is organized as a double oral auction in which participants trade a single-period asset with uncertain value. Traders are informed of the...