This chapter reports the results of laboratory asset markets in which each trader receives an initial portfolio of cash and shares of a security with an earnings life of 15 trading periods. Each trader is free to trade shares of the security using double auction trading rules. At the end of the...

Laboratory asset markets provide an experimental setting in which to observe investor behavior. Over more than a decade, numerous studies have found that participants in laboratory experiments frequently drive asset prices far above fundamental value, after which the prices crash. This...