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Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-51990

Becker, Ralf; Fischbacher, Urs; Hens, Thorsten (2002). Soft Landing of a Stock Market Bubble - An Experimental Study. Working paper series / Institute for Empirical Research in Economics No. 90, University of Zurich.

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Abstract

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.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
DDC:330 Economics
Language:English
Date:January 2002
Deposited On:29 Nov 2011 21:26
Last Modified:09 Jul 2012 05:01
Series Name:Working paper series / Institute for Empirical Research in Economics
ISSN:1424-0459
Official URL:http://www.econ.uzh.ch/wp.html

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