"An Experimental Evaluation of Strategic Preemption"
"An Experimental Evaluation of Strategic Preemption"JEL codes:
Abstract: Price volatility and investor overreactions are commonplace in experimental asset markets. Understanding the price dynamics in these markets is crucial for designing successful new trading institutions. We report on a series of experiments to test the predictions of a new momentum model using a dynamical systems approach. This model is then pitted against several standard models to predict prices, as well as against expert human forecasters. The comparative results suggest that each model has its advantages and regions of best performance. Overall, the best predictive methods are the momentum model and expert human forecasters.
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