Abstract
Most lab experiments carried out on asset price bubbles have been based upon theoretical models that do not factor in a bubbling equilibrium. The aim of this paper is to propose a lab experiment which uses a model with bubbling equilibrium as its benchmark; to specify we used a modified version of the model built by Abreu and Brunnermeier (2003). In both models the asymmetries of information regarding the existence of the asset price bubbles induce rational traders to perpetuate the bubbles. In our experiment we found that human traders are, most of the time, risk averse, they suffer impatience and do not necessarily react appropriately to coordination messages (even though the presence of said messages affects their behavior) and sometimes they clearly behave irrationally. Last but not least, during the experiment we also found that the human traders could adapt their strategies to optimal equilibrium strategies, so long as these strategies were not too complex - but not all human traders have the same ability to execute this adaptation process.
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