We examine whether the sustainable character of an investment impacts asset prices in experimental asset markets. We use asset markets with the structure introduced by Smith, Suchanek, and Williams (1988) to investigate the impact of positive, neutral and negative sustainability attributes. Prior studies suggest that investors experience positive emotions when choosing a sustainable investment and that positive emotions correlate with purchases and overpricing. Our design allows for simultaneous observations of both phenomena and we find that sustainability positively influences asset prices through the channels of preferences and emotions, which we measure using face-reading software. Moreover, higher sustainability preferences and the fraction of female traders increase overpricing given that the asset is sustainable.
