Heterogeneity of beliefs and trade in experimental asset markets

Tim A. Carlé, Yaron Lahav, Tibor Neugebauer, Charles N. Noussair

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


We investigate the relationship between traders' expectations and market outcomes with experimental asset market data. The data show that those who have high price expectations buy more frequently and submit higher bids, and those who hold low price expectations sell more frequently and submit lower bids. Traders who have more accurate expectations achieve greater earnings. Simulations using only belief data reproduce the pricing patterns observed in the market well, indicating that the heterogeneity of expectations is a key to explaining market activity.

Original languageEnglish
Pages (from-to)215-245
Number of pages31
JournalJournal of Financial and Quantitative Analysis
Issue number1
StatePublished - 1 Feb 2019

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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