Bubbles, experience and success

One of the most robust findings in the experimental asset market literature is the experience effect: markets are efficient, that is, they generate prices close to fundamentals, as long as at least some traders are familiar with the environment. In this paper we show that market efficiency of mixed-experience markets is sensitive to the previous success of experienced traders. This sensitivity results from differences in trading behavior that prevail across experimental rounds. On the other hand, we find no evidence for the experience effect: our markets with experienced and inexperienced traders are not different from each other, even though our design and procedures closely follow those from the literature.