Corgnet, B.; Hernán-González, R.; Kujal, P.; Porter, D.

The effect of earned versus house money on price bubble formation in experimental asset markets

Article

Corgnet, B., Hernán-González, R., Kujal, P. and Porter, D. 2015. The effect of earned versus house money on price bubble formation in experimental asset markets. Review of Finance. 19 (4), pp. 1455-1488. https://doi.org/10.1093/rof/rfu031

Publication dates
Type	Article
Title	The effect of earned versus house money on price bubble formation in experimental asset markets
Authors	Corgnet, B., Hernán-González, R., Kujal, P. and Porter, D.
Abstract	Does house money exacerbate price bubbles? We compare house money asset market experiments with an earned money treatment where initial portfolios are constructed from a real effort task. Bubbles occur; however, trading volumes and earnings dispersion are significantly higher with house money. We investigate the role of cognitive ability in accounting for the differences in earnings distribution across treatments by using the cognitive reflection test (CRT). Low CRT subjects earned less than high CRT subjects. Low CRT subjects were net purchasers (sellers) of shares when the price was above (below) fundamental value. The opposite was true for high CRT subjects.
Publisher	Oxford University Press (OUP)
Journal	Review of Finance
ISSN	1573-692X
Online	18 Aug 2014
Print	01 Jul 2015
Publication process dates
Deposited	31 Oct 2014
Output status	Published
Publisher's version	Review of Finance-2014-Corgnet-rof-rfu031.pdf
Copyright Statement	© The Authors 2014. Published by Oxford University Press on behalf of the European Finance Association. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.permissions@oup.com
Digital Object Identifier (DOI)	https://doi.org/10.1093/rof/rfu031
Language	English

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