Work

Speculating in zero-value assets: The greater fool game experiment

Year: 2025

Type: article

Abstract: In a pre-registered laboratory asset market study, we investigate dynamics of asset markets with zero (or close to zero) fundamental values. We introduce the “greater fool asset market game” with a zero-value token, whose price doubles in each period. We design several treatments, which differ in terms of whether the fundamental value is zero for sure, and whether the rather low probability of non-zero fundamentals is known (Risk) or not (Ambiguity). We find that pricesin markets with zero fundamental value are clearly above zero. Furthermore, we report that prices in treatment Ambiguity are substantially higher than those in the baseline and in treatment Risk. Finally, we show that beliefs regarding the asset’s value and others’ participation explain individual market participation.

Source: European Economic Review

DOI: 10.1016/j.euroecorev.2025.105180

Authors: Armando Holzknecht, Jürgen Huber, Michael Kirchler, Tibor Neugebauer

Institutions: Universität Innsbruck, University of Luxembourg

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,690

Funders: Fonds National de la Recherche Luxembourg, Austrian Science Fund