Experimental Asset Markets with An Indefinite Horizon

How long is forever in the laboratory? Three implementations of an infinite-horizon monetary economy

“…The first method is the standard method used in experimental economics. The second and third methods also rely on random termination and have been used by researchers to implement infinite-horizon settings (see e.g., Duffy et al 2019;Jiang et al 2020;Sabater-Grande and Georgantzis 2002;and Wilson and Wu 2017). The fourth method features a fixed number of deterministic discounted rounds, followed by a coordination game induced by considering the grim trigger strategy and the strategy of always defecting, both of which are two particular strategies that are commonly adopted in the infinitely repeated game.…”

“…Note that in Fréchette and Yuksel (2017) subjects always play in blocks of T periods and, if time allows, after a sequence ends they will start a new block of T periods. We modified the original procedure in our experiment because it guarantees at least T periods of data for each sequence and, at the same time, allows us to fit more sequences into a session: after the first block, the sequence can stop anytime instead of at the end of another T -period block (see also Duffy et al (2019)).…”

The Role of the End Time in Experimental Asset Markets

“…Compared to the literature with definite horizons, there are only very few papers with indefinite horizons. As the experimental asset market literature is by now very large and diverse, it is not surprising that there are nevertheless already some papers that make use of an indefinite end time in the laboratory (e.g., Hens and Steude, 2009;Asparouhova et al, 2016;Fenig et al, 2018;Crockett et al, 2019;Weber et al, 2019;Duffy et al, 2020).…”

The Role of the End Time in Experimental Asset Markets

“…Compared to the literature with definite horizons, there are only very few papers with indefinite horizons. As the experimental asset market literature is by now very large and diverse, it is not surprising that there are nevertheless already some papers that make use of an indefinite end time in the laboratory (e.g., Hens and Steude, 2009;Asparouhova et al, 2016;Fenig et al, 2018;Crockett et al, 2019;Weber et al, 2019;Duffy et al, 2020).…”