Abstract:
Price bubbles, which depict that market prices deviate from fundamental values for extended periods, are pervasive and robust. With decades of research, economists have run laboratory experiments to find influential factors behind this mispricing phenomenon. Our work focuses on gender differences in generating price bubbles in asset markets with flat fundamental value. We find that males produce large but not significant bubbles compared to females. Although females score higher on risk aversion, trait anxiety, and lower on a cognitive skills quiz, we find no significant gender differences in forming price bubbles. The final earnings for both genders are similar and also suggest no gender gap in final performance. Males are more active in trading assets, while females keep a more stable price level. We see significant gender differences in regressions on absolute Individual Buy Bias, which is defined as the absolute difference between bid price in period t and market price in period t-1. Regressions on holding Shares show that in the participants with low cognitive scores, males hold more shares than females, otherwise no gender gaps are found. There are some significant interaction effects between gender, risk aversion and cognitive ability. For example, risk-averse males exhibit lower price bias and those who score highly on the cognitive quiz hold fewer shares.