A culture of greed: Bubble formation in experimental asset markets with greedy and non-greedy traders.

Karlijn Hoyer; Stefan Zeisberger; Seger Breugelmans; Marcel Zeelenberg

doi:10.1016/j.jebo.2023.05.005

A culture of greed: Bubble formation in experimental asset markets with greedy and non-greedy traders.

Karlijn Hoyer, Stefan Zeisberger^*, Seger Breugelmans, Marcel Zeelenberg

^*Corresponding author for this work

Social Psychology

Research output: Contribution to journal › Article › Scientific › peer-review

2 Citations (Scopus)

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Abstract

This study investigates the relationship between the motive of greed and various asset market indicators, such as trading activity and bubble formation (i.e., mispricing, overpricing, and price amplitude). We ran experimental asset markets that allowed us to measure individuals’ greed in order to create markets populated with greedy individuals and markets with non-greedy individuals. Regarding trading activity, we found that greedier individuals had higher trading activity on the individual level but not on the market level. On the market level, high-greed markets exhibited less frequent and smaller price bubbles than markets with less greedy traders. If our findings translate to actual markets, greed itself might not contribute to asset market bubbles.

Original language	English
Pages (from-to)	32-52
Journal	Journal of Economic Behavior and Organization
Volume	212
DOIs	https://doi.org/10.1016/j.jebo.2023.05.005
Publication status	Published - 2023

Keywords

Dispositional greed
Experimental finance
Experimental asset markets
Bubbles
Mispricing

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10.1016/j.jebo.2023.05.005Licence: CC BY

SP Hoyer a culture of greed JoEBaO 2023Final published version, 1.99 MBLicence: CC BY

Cite this

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title = "A culture of greed: Bubble formation in experimental asset markets with greedy and non-greedy traders.",

abstract = "This study investigates the relationship between the motive of greed and various asset market indicators, such as trading activity and bubble formation (i.e., mispricing, overpricing, and price amplitude). We ran experimental asset markets that allowed us to measure individuals{\textquoteright} greed in order to create markets populated with greedy individuals and markets with non-greedy individuals. Regarding trading activity, we found that greedier individuals had higher trading activity on the individual level but not on the market level. On the market level, high-greed markets exhibited less frequent and smaller price bubbles than markets with less greedy traders. If our findings translate to actual markets, greed itself might not contribute to asset market bubbles.",

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PY - 2023

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AB - This study investigates the relationship between the motive of greed and various asset market indicators, such as trading activity and bubble formation (i.e., mispricing, overpricing, and price amplitude). We ran experimental asset markets that allowed us to measure individuals’ greed in order to create markets populated with greedy individuals and markets with non-greedy individuals. Regarding trading activity, we found that greedier individuals had higher trading activity on the individual level but not on the market level. On the market level, high-greed markets exhibited less frequent and smaller price bubbles than markets with less greedy traders. If our findings translate to actual markets, greed itself might not contribute to asset market bubbles.

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KW - Experimental finance

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KW - Bubbles

KW - Mispricing

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EP - 52

JO - Journal of Economic Behavior and Organization

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A culture of greed: Bubble formation in experimental asset markets with greedy and non-greedy traders.

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Keywords

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