Cookies?
Library Header Image
LSE Research Online LSE Library Services

Information aggregation in financial markets with career concerns

Dasgupta, Amil and Prat, Andrea (2008) Information aggregation in financial markets with career concerns. Journal of Economic Theory, 143 (1). pp. 83-113. ISSN 1095-7235

Full text not available from this repository.

Abstract

What are the equilibrium features of a dynamic financial market in which traders care about their reputation for ability? We modify a standard sequential trading model to include traders with career concerns. We show that this market cannot be informationally efficient: there is no equilibrium in which prices converge to the true value, even after an infinite sequence of trades. We characterize the most revealing equilibrium of this game and show that an increase in the strength of the traders' reputational concerns has a negative effect on the extent of information that can be revealed in equilibrium but a positive effect on market liquidity.

Item Type: Article
Official URL: http://jet.arts.cornell.edu/Main.html
Additional Information: © 2008 Elsevier Inc.
Library of Congress subject classification: H Social Sciences > HG Finance
Journal of Economic Literature Classification System: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty
G - Financial Economics > G0 - General
Sets: Departments > Economics
Departments > Finance
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 08 Feb 2011 11:08
URL: http://eprints.lse.ac.uk/32259/

Actions (login required)

Record administration - authorised staff only Record administration - authorised staff only