The Effects Of Professional Predications On Price Bubbles In Experiment Asset Markets

In the asset markets, the expansion and collapse of price bubbles have severe negative influences on the stable of the market. More seriously, they can. lead to disaster of economics. Noted that, it has a practically significance to control and eliminate the bubbles by finding out the cause and influences of the bubbles. Actually, more and more economists are devoted themselves to investigating influencing factors of the price bubbles, for example, a short sale, upper and lower limits of price and futures markets, etc.By analyzing the real market, we have found that the stock analysts industry plays an important role in asset markets since the nineties of last century. There are many stock investors make deals based on the predication of stock evaluation. It is obviously that the stock evaluation more or less influence asset price. However, lots of unhealthy phenomena are found in the profession of stock evaluation, such as lack of professional quality. It always results in repeated mistakes of predications, which will cause severe economic loss of investors. Worse, investors'interests will be infringed when some stock evaluators pack cards with the dealers to giving false predications. For this reason, the levels of predications and honesties for stock evaluators have an effect on the assets prices. Based on the above analysis, it is considered that professional predications play a vital role in the formation of assets prices bubbles. What's more, it has been investigated that how the professional predications affect assets prices bubbles.In order to investigate the influences of professional predications on assets prices, we decide to use the experiment methods. We have set four different experimental conditions including Experiment W (inexperienced market without professional predications), Experiment H1 (mixed market without professional predications), Experiment H2 (mixed market without collusions) and Experiment H3 (mixed market with collusions). Based on the Z-Tree platform, we made a computer program, and let college students take part in the experiments to simulate the trades in different asset markets, and we took down all the data of asset prices. By comparing prices data of the four experiments, it is concluded that the participation of a few of experienced dealers in the mixed market are not able to eliminate price bubbles, even though the experiences can affect price bubbles. That is to say, the mixed market can cause price bubbles, sometimes even worse than that of inexperienced market. In the mixed market with professional predications, if specialists provide reliable stock information to dealers, the price bubbles will be controlled. On the contrary, even if specialists collude with some dealers and spread mistake news, the price bubbles will also be effectively eliminated. Besides, on the premise of without considering market efficiency, moral and laws, reliable and unreliable professional predications can both eliminate price bubbles. There is no significant difference between the influences of two kinds of predications.On the basis of the thing that forefathers study, we make several innovations in the investigation. First, for the method, we applied our new experimental data to investigate the problem. Also it is creative of the four different experiments and the data statistic. Second, for the contents researched, it is fixed at the professional predication that had been confirmed to be an extremely important factor. This work is useful in practice even though we do not have a comprehensive investigation of price bubbles.It is also need to be well understood that the influence of professional predications on stoke price bubbles. In this paper, specialists are divided rather simply by honest and dishonest persons. What is more, it is necessary to discuss other factors that can affect the price bubbles such as the experts'knowledge levels.