Unleashing Animal Spirits - Self-Control and Overpricing in Experimental Asset Markets

Martin Kocher, Konstantin Lucks and David Schindler
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Konstantin Lucks: LMU Munich

No 81, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: One explanation for overpricing on asset markets is a lack of traders\' self-control. Self-control is the individual capacity to override or inhibit undesired impulses that may drive prices. We implement the first experiment to address the causal relationship between self-control abilities and systematic overpricing on financial markets. Our setup can detect some of the channels through which individual self-control restrictions could transmit into irrational exuberance in markets. Our data indicate a large direct effect of restricted self-control abilities on market overpricing. Low self-control traders report stronger emotions after the market.

Keywords: behavioral finance; trader behavior; self-control; experimental asset markets; overpricing (search for similar items in EconPapers)
JEL-codes: D53 D84 G02 G11 G12 (search for similar items in EconPapers)
Date: 2018-03-12
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Unleashing Animal Spirits: Self-Control and Overpricing in Experimental Asset Markets (2019)
Working Paper: Unleashing Animal Spirits - Self-Control and Overpricing in Experimental Asset Markets (2016)
Working Paper: Unleashing Animal Spirits - Self-Control and Overpricing in Experimental Asset Markets (2016)
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