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Market Experiment (market + experiment)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	75%

Selected Abstracts

Evaluation Periods and Asset Prices in a Market Experiment

THE JOURNAL OF FINANCE, Issue 2 2003
Uri Gneezy
We test whether the frequency of feedback information about the performance of an investment portfolio and the flexibility with which the investor can change the portfolio influence her risk attitude in markets. In line with the prediction of myopic loss aversion (Benartzi and Thaler (1995)), we find that more information and more flexibility result in less risk taking. Market prices of risky assets are significantly higher if feedback frequency and decision flexibility are reduced. This result supports the findings from individual decision making, and shows that market interactions do not eliminate such behavior or its consequences for prices. [source]

Examining the use of subsidies for the abatement of greenhouse gas emissions through experimental simulations

ENVIRONMENTAL POLICY AND GOVERNANCE, Issue 4 2006
Lars E. Olsson
Abstract A market experiment was designed to empirically investigate the potential effectiveness of a governmental subsidy system to reduce sales and therefore production of environmentally harmful products. The important issue of whether the subsidy system preserves competitiveness was also examined. In the experiment two levels of a subsidy for unsold units were compared with no subsidy. To simulate the way in which subsidy levels may vary across time in real markets, the effects of high and low uncertainty regarding the subsidy level were also investigated. The results showed that subsidies, whether known and fixed or uncertain and varying, did not erode competition but nevertheless led to higher prices, which resulted in fewer sales. In the control condition a price war resulting in decreasing prices and increasing sales were observed. Several ways in which the proposed subsidy system may be implemented in the transport sector and other sectors are discussed. It is suggested that subsidies may make the adjustment process toward sustainable production less costly for the regulated parties. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment. [source]

Market Efficiency, Bounded Rationality, and Supplemental Business Reporting Disclosures

JOURNAL OF ACCOUNTING RESEARCH, Issue 2 2001
J. Richard Dietrich
The AICPA Special Committee on Financial Reporting has urged disclosure of relevant forward-looking information on risks and opportunities to supplement conventional financial statements. We conduct a laboratory market experiment to assess the effects of such disclosures on capital allocation decisions. We develop two sets of competing hypotheses regarding how capital markets react to supplemental disclosures. One set is based on the assumption of semi-strong market efficiency, while the other posits that the bounded rationality of individual traders leads to inefficient market prices. We find that explicit disclosure of management's best estimate of an uncertain quantity improves market efficiency, even though this disclosure is redundant with information in financial statements. Second, we find disclosure of an upper bound of management's estimate has the potential to bias security prices upward, while informationally equivalent disclosure of both upper and lower bounds removes this bias. These results suggest that experimental market reactions to these supplemental disclosures are inconsistent with market efficiency. Supplemental analyses of individuals' price predictions and trading behavior support our conclusion that inefficiencies are at least partially attributable to individual information processing biases. [source]

Traceability in the Canadian Red Meat Sector: Do Consumers Care?

CANADIAN JOURNAL OF AGRICULTURAL ECONOMICS, Issue 1 2005
Jill E. Hobbs
Increased traceability of food and food ingredients through the agri-food chain has featured in recent industry initiatives in the Canadian livestock sector and is an important facet of the new Canadian Agricultural Policy Framework (APF). While traceability is usually implicitly associated with ensuring food safety and delivering quality assurances, there has been very little economic analysis of the functions of traceability systems and the value that consumers place on traceability assurances. This paper examines the economic incentives for implementing traceability systems in the meat and livestock sector. Experimental auctions are used to assess the willingness to pay of Canadian consumers for a traceability assurance, a food safety assurance, and an on-farm production method assurance for beef and pork products. Results from these laboratory market experiments provide insights into the relative value for Canadian consumers of traceability and quality assurances. Traceability, in the absence of quality verification, is of limited value to individual consumers. Bundling traceability with quality assurances has the potential to deliver more value. La traçabilité accrue des produits et des ingrédients alimentaires dans la chaîne agro-alimentaire a été mise en valeur dans les récents projets de l'industrie canadienne du bétail et représente un aspect important du Cadre stratégique pour l'agriculture (CSA). Bien que le concept de traçabilité soit habituellement et implicitement associéà la sécurité et à la qualité alimentaires, très peu d'analyses économiques se sont penchées sur les fonctions des systèmes de traçabilité et sur la valeur que les consommateurs accordent aux garanties de traçabilité. Cet article étudie les stimulants économiques de la mise en ,uvre des systèmes de traçabilité dans l'industrie de la viande et du bétail. Des ventes aux enchères expérimentales permettront d'évaluer si les consommateurs canadiens sont prêts à payer pour obtenir une garantie de traçabilité et de sécurité alimentaire ainsi qu'une garantie de méthode de production chez les éleveurs de b,uf et de porc. Les résultats de ces expériences obtenues dans ces marchés de laboratoire fourniront un aperçu de la valeur relative des garanties de traçabilité et de qualité pour les consommateurs canadiens. En l'absence de vérification de la qualité, la traçabilité ne présente que peu de valeur pour les consommateurs. Par contre, une plus grande valeur lui serait accordée si elle était associée à la garantie de la qualité. [source]