Price Manipulation in an Experimental Asset Market Articles uri icon

publication date

  • April 2009

start page

  • 327

end page

  • 342


  • 3


  • 53

International Standard Serial Number (ISSN)

  • 0014-2921

Electronic International Standard Serial Number (EISSN)

  • 1873-572X


  • We analyze in the laboratory whether an uninformed trader is able to manipulate the price of a financial asset by comparing the results of two experimental treatments. In the benchmark treatment, 12 subjects trade a common value asset that takes either a high or a low value. Only three subjects know the actual value of the asset while the market is open for trading. The manipulation treatment is identical to the benchmark treatment apart from the fact that we introduce a computer program as an additional uninformed trader. This robot buys a fixed number of shares in the beginning of a trading period and sells them again afterwards. Our main result shows that the last contract price is significantly higher in the manipulation treatment if the asset takes a low value and that private information is very well disseminated by both markets if the value of the asset is high. Finally, even though this simple manipulation program loses money on average, it is profitable in some instances.


  • asset market; experiment; price manipulation; rational expectations