Information Aggregation in Experimental Asset Markets in the Presence of a Manipulator Articles uri icon

publication date

  • December 2010

start page

  • 379

end page

  • 398

issue

  • 4

volume

  • 13

International Standard Serial Number (ISSN)

  • 1386-4157

Electronic International Standard Serial Number (EISSN)

  • 1573-6938

abstract

  • We study with the help of a laboratory experiment the conditions under which an uninformed manipulator—a robot trader that unconditionally buys several shares of a common value asset
    in the beginning of a trading period and unwinds this position
    later on—is able to induce higher asset prices. We find that
    the average price is significantly higher in the presence of
    the manipulator if and only if the asset takes the lowest
    possible value and insiders receive perfect information about the
    true value of the asset. It is also evidenced that the robot
    trader makes trading gains. Finally, both uninformed and partially
    informed traders may suffer from the presence of the robot.