We report the results of an experiment designed to study whether or not having experienced booms and crashes in naturally occurring asset markets affects subjects' trading behavior in the lab. Active investors in the Shanghai Stock Exchange were recruited to participate in either the Boom...

Major bubble episodes are rare events. In this paper, we examine what factors might cause some asset price bubbles to become very large. We recreate, in a laboratory setting, some of the specific institutional features investors in the South Sea Company faced in 1720. Several factors have been...