Does Structured Communication Matter in Experimental Asset Markets?

Abstract

In an experimental asset market that is known for being prone to mispricing (Smith, Suchanek, and Williams, 1988), we allow structured communication. Subjects communicate their price expectations with each other. We measure the effects of communication on market expectations and price efficiency. Our results confirm that structured communication makes heterogeneous expectations more homogeneous and impacts the individual decision process but does not necessarily enhance mispricing.

Presented by Tibor Neugebauer.