No-Trade in the Laboratory
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Marco Angrisani
We construct laboratory financial markets in which subjects can trade an asset whose value is unknown. Subjects receive private clues about the asset value and then set bid and ask prices at which they are willing to buy or to sell from the other participants. In some of our markets (experimental treatments), there are gains from trade, while in others there are no gains: trade is zero sum. Celebrated no-trade theorems state that differences in private information alone cannot explain trade in the zero sum case. We study whether purely informational trade is eliminated in our experimental markets with no gains. The comparison of our results for gains and no-gains treatments shows that subjects fail to reach the no-trade outcome by pure introspection, but they approach it over time through market feedback and learning. Furthermore, the less noisy the clue-asset relationship is, the closer trade comes to being eliminated entirely.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Advances Article
- Strategy-Proof Compromises
- Make-or-Buy Decisions and the Manipulability of Performance Measures
- Optimal Mechanism for Selling Two Goods
- A Property of Solutions to Linear Monopoly Problems
- Interactive Epistemology and Solution Concepts for Games with Asymmetric Information
- No-Trade in the Laboratory
- Symmetry or Dynamic Consistency?
- Contributions Article
- When Two-Part Tariffs are Not Enough: Mixing with Nonlinear Pricing
- Sellers Like Clusters
- Network Architecture and the Left-Right Spectrum
- Information, Authority, and Corporate Hierarchies
- The Benefit of Mixing Private Noise into Public Information in Beauty Contest Games
- Intertemporal Bounded Rationality as Consideration Sets with Contraction Consistency
- The Survival Assumption in Intertemporal Economies
- A New Existence and Uniqueness Theorem for Continuous Games
- Multiproduct Duopoly with Vertical Differentiation
- Topics Article
- Sequential Investments, Know-How Transmission, and Optimal Organization
- Input Production Joint Venture
- On the Existence and Social Optimality of Equilibria in a Hotelling Game with Uncertain Demand and Linear-Quadratic Costs
- Stochastic Stability in Finitely Repeated Two Player Games
- Alliance Partner Choice in Markets with Vertical and Horizontal Externalities
- Transitional Dynamics in a Tullock Contest with a General Cost Function
- Strategic Choice of Preferences: the Persona Model
- Implementation of the Core in College Admissions Problems When Colleagues Matter
