Learning From Unrealized versus Realized Prices


Ngangoue, M. Kathleen (New York University)
Weizsäcker, Georg (Humboldt University Berlin)


Our experiments investigate the extent to which traders learn from the price, differentiating between situations where orders are submitted before versus after the price has realized. In simultaneous markets with bids that are conditional on the price, traders neglect the information conveyed by the hypothetical value of the price. In sequential markets where the price is known prior to the bid submission, traders react to price to an extent that is roughly consistent with the benchmark theory. The difference’s robustness to a number of variations provides insights about the drivers of this effect.



D82; D81; C91


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Learning From Unrealized versus Realized Prices
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