Review of Finance Vol. 20 No. 2 2016

Bubbling with Excitement: An Experiment

Eduardo B. Andrade¹; Terrance Odean²; Shengle Lin³

¹ 1 Brazilian School of Public and Business Administration, · ² 2 University of California, Berkeley, and · ³ 3 San Francisco State University

Abstract

Anecdotal and indirect empirical evidence suggest that excitement and market bubbles are intertwined, such that excitement not only arises during bubbles but may also help fuel them. We directly test the impact of excitement on bubbles in a bubble-prone experimental asset-pricing market ( Capinalp, Porter, and Smith, 2001 ). Prior to trading, participants are assigned to emotion inductions through video clips The results of fifty-five markets show larger asset pricing bubbles in magnitude and amplitude in the excitement treatment relative to a treatment of same valence and lower intensity ( calm ) and a treatment of similar intensity and opposite valence ( fear ).

DOI

10.1093/rof/rfv016

Volume

20

Issue

2

Pages

447-466

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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