Designing Call Auction Institutions to Eliminate Price Bubbles: Is English Dutch the Best?

A-Tier
Journal: American Economic Review: Insights
Year: 2020
Volume: 2
Issue: 2
Pages: 225-36

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The bubble-and-burst pattern in asset markets is among the most replicable results in experimental economics. Using controlled laboratory experiments, we compare mispricing in markets organized by standard double auction rules with mispricing in markets organized by two alternative sets of clock auctions. The double Dutch auction, shown to be more efficient than the double auction in past commodity market experiments, does not eliminate bubbles. However, the English Dutch auction yields prices reflective of underlying fundamentals and succeeds in taming bubbles even with inexperienced traders in a declining fundamental value environment with an increasing cash-to-asset ratio.

Technical Details

RePEc Handle
repec:aea:aerins:v:2:y:2020:i:2:p:225-36
Journal Field
General
Author Count
3
Added to Database
2026-01-25