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Time pressure reduces financial bubbles : evidence from a forecasting experiment
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Orientador(es)
Resumo(s)
We investigate whether time pressure exacerbates or mitigates bubbles in laboratory experiments. We find that under high time pressure price volatility is
lower and market prices are closer to their fundamental value. This is due to
participants using simpler adaptive forecasting strategies, instead of the selfreinforcing extrapolative expectations that they use under low time pressure,
and which are conducive to the emergence of bubbles. In addition, by substantially increasing the number of decision periods in our experiment we find that
in the long run prices eventually tend to converge to their fundamental value,
also in the absence of time pressure.
Descrição
Palavras-chave
expectation formation learning-to-forecast time pressure long run dynamics forecasting strategies
Contexto Educativo
Citação
Anufriev, Mikhail, Frieder Neunhoeffer e Jan Tuinstra (2024). "Time pressure reduces financial bubbles : evidence from a forecasting experiment". REM Working paper series, nº 0351/2024
Editora
ISEG – REM (Research in Economics and Mathematics)