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Strategies & Market Trends : Hedge Funds

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To: Dynamite who wrote (9)9/11/1998 3:01:00 PM
From: Marty Rubin  Read Replies (1) of 120
 
Subject: "Experimental Price Bubble" Question # "4. Does the opportunity to short sell diminish the amplitude and duration of the speculative price bubbles observed in laboratory stock markets? The hypothesis that bubbles are moderated if trades can sell short rests on the argument that those traders who expect the bubble to burst can
leverage their sales by taking a short position. Consequently, a small number of traders who have counter-cyclical expectations would be able to offset the ebullient expectations of others. The data fail to support this hypothesis. The duration and amplitude of bubbles remain about the same, but the volume of trading rises significantly above those of experiments in which short selling is not allowed" (Page 208).

"Business Cycles and Depressions --An Encyclopedia," Ed. by David Glasner (Federal Trade Commission) Garland Publishing Co. New York & London 1997 ISBN 0-8240-0944-4 amazon.com

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