Bubbles, inertia, and experience in experimental asset markets

We find that irrational bubbles continue to form in an experimental assets market even though experience lessens specious market pricing. However, this irrationality may remain hidden from the customary observational perspective. Both price expectations and bubbles appear rational, passing both traditional and cointegration tests. Conventional statistical testing has difficulty distinguishing "irrational" inertia from "rational" market behavior. Yet, inertia provides a much better explanation of observed, experimental market prices than do the "fundamentals" Keywords: Inertia, Rational Bubbles, Experimental Markets, Econometric Testing.