Futures Contracting and Dividend Uncertainty in Experimental Asset Markets
Year: 1995
Type: article
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.
Source: The Journal of Business
DOI: 10.1086/296675
Authors: David P. Porter, Vernon L. Smith
Institution: Chapman University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2088101702