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ERIC Number: EJ827133
Record Type: Journal
Publication Date: 2009
Pages: 11
Abstractor: As Provided
Reference Count: 19
ISSN: ISSN-0022-0485
Price Bubbles with Discounting: A Web-Based Classroom Experiment
Bostian, AJ A.; Holt, Charles A.
Journal of Economic Education, v40 n1 p27-37 Win 2009
The authors describe a Web-based classroom experiment with two assets: cash and a stock that pays a random dividend. The interest rate on cash, coupled with a well-chosen final redemption value for the stock, induces a flat trajectory for the fundamental value of the stock. However, prices typically rise above this value during a session. The bubbles and crashes that occur in this experiment can stimulate a discussion of asset valuation, discounting, and pricing patterns that are determined by expectations and "animal spirits." (Contains 3 figures and 3 notes.)
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education; Postsecondary Education
Audience: Teachers
Language: English
Sponsor: N/A
Authoring Institution: N/A