Hüsler, A., Sornette, D. and Hommes, C. (2013). Super-exponential bubbles in lab experiments: evidence for anchoring over-optimistic expectations on price Journal of Economic Behavior and Organization, 92:304--316.
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Affiliated author
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Publication year2013
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JournalJournal of Economic Behavior and Organization
We analyze a controlled price formation experiment in the laboratory that shows evidence for bubbles. We calibrate two models that demonstrate with high statistical significance that these laboratory bubbles have a tendency to grow faster than exponential due to positive feedback. We show that the positive feedback operates by traders continuously upgrading their over-optimistic expectations of future returns based on past prices rather than on realized returns.