Great article. I wonder how the experiments would have turned out if people were allowed to short-sell. My guess is that the bubbles and crashes would be a lot

Great article. I wonder how the experiments would have turned out if people were allowed to short-sell. My guess is that the bubbles and crashes would be a lot less common. When people can only go long, there's a desire to buy in order to be "participating", and there's also the effect of the Winner's Curse. One interesting result I read about in Aaron Brown's The Poker Face of Wall Street involved a mock security that would mature either to $0 or $20, with a 50% chance of each. The participants would be given index cards; half of the cards had the security's correct value, and half were blank. The price would start around $10 (since those who have information don't want to show it by bidding $19/$1) but rapidly converge to the fair value. When the experiment was done with everyone receiving blank cards (but no one knowing that all cards were blank) trading would start, as usual, right around $10. In many cases, it would converge to $0 or $20 as the market "figured out" the fair value.