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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Soft Landing of a Stock Market Bubble - An Experimental Study |
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| Institution | University of Zurich |
| Series Name | Working paper series / Institute for Empirical Research in Economics |
| Number | No. 90 |
| ISSN | 1424-0459 |
| Date | 2002 |
| Abstract Text | The paper investigates the effect of interest policy on price bubbles, trading behavior and portfolio choice in experimental stock markets. Anseries of experiments has 8 participants trade an asset over 15 periods. Alternatively, the participants can invest money in interest-bearing bonds. Treatment groups are subjected to an endogenous interest policy, while control groups experience a constant interest rate. Our stock markets are characterized by bubbles. While we observe a small positive impact of our interest policy on bubbles, the policy also strongly increases market volatility. On the other hand, concerning portfolio choice, we find evidencenfor value-driven (rational) investment behavior. |
| Official URL | http://www.econ.uzh.ch/wp.html |
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