45 research outputs found
Two heads are less bubbly than one: Team decision-making in an experimental asset market
In the world of mutual funds management, responsibility for investment decisions is increasingly entrusted to small teams instead of individuals. Yet the effect of team decision-making in a market environment has never been studied in a controlled experiment. In this paper, we investigate the effect of team decision-making in an asset market experiment that has long been known to reliably generate price bubbles and crashes in markets populated by individuals. We find that this tendency is substantially reduced when each decision-making unit is instead a team of two. This holds across a broad spectrum of measures of the severity of mispricing, both under a continuous double-auction institution and in a call market. The result is not driven by reduced turnover due to time required for deliberation by teams, and continues to hold even when subjects are experienced. Our result also holds not only when our teams treatments are compared to the ‘narrow’ baseline provided by the corresponding individuals treatments, but also when compared more broadly to the results of the large body of previous research on markets of this kind
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Replication and efficiency in experiments for marketable emissions permits
The Energy Information Administration (EIA) funded the universities of Colorado and Arizona to define an experimental institution that captures the salient features of the sulfur dioxide allowance market created by the Clean Air Act Amendments of 1990 (CAAA); to develop and document a transportable software that implements the experimental institutions; and to replicate experiments. Subsequently, EIA, in conjunction with the Oak Ridge National Laboratory (ORNL) funded the universities of Mississippi and Southern California to test the replicability of these experiments using statistically sound experimental design and the standardized software developed by the University of Arizona. The present experiment is designed to identify any differences in the results of the two laboratory sites. It is designed to determine whether market outcomes are reproducible across different laboratories and experimenters and to determine if any behavior patterns exist across a large set of independent experimental sessions