The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Laboratory Financial Markets

  • Daniel Friedman
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2766

Abstract

Small-scale financial markets have been studied in the laboratory for more than two decades. Typically, 6–20 human subjects buy and sell units of a single asset whose dividends extend over several periods and/or are uncertain. Such markets permit direct observation of informational efficiency, and allow sharp tests of theoretical predictions. They also provide test beds for policy initiatives, new market formats and automated trading strategies.

Keywords

Arbitrage Asset price formation Behavioural finance Bid–ask markets Bubbles Call markets Continuous double auction Efficient markets hypothesis Equity premium Experimental economics Financial market anomalies Information aggregation Iowa Electronic Market Laboratory financial markets Learning Market institutions Posted offer Prediction markets Prospect theory South Sea bubble Stationary repetition Tulipmania 

JEL Classifications

C9 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Daniel Friedman
    • 1
  1. 1.