Document Type
Article
Publication Date
1995
Abstract
Prices in experimental asset markets tend to bubble and then crash to dividend value at the end of the asset's useful life. Explanations for this phenomenon are (1) that participants cannot form reliable future price expectations or (2) dividend risk aversion. We report the results of experiments to test these hypotheses. In one experimental series, a futures market is introduced so that participants can obtain information on future share prices. In another series of experiments, the per-period dividend is known with certainty. The futures market treatment had little effect on the character of bubble. The certain dividend treatment had little effect on the character of bubbles with inexperienced traders.
Recommended Citation
Porter, David P., and Vernon L. Smith. “Futures Contracting and Dividend Uncertainty in Experimental Asset Markets.” Journal of Business, 68.4 (1995): 509-541.
Peer Reviewed
1
Copyright
University of Chicago
Comments
This article was originally published in Journal of Business, volume 68, issue 4, in 1995.