Trading motives in asset markets

Arbeitspapier

I study how trading motives in asset markets affect equilibrium outcomes and welfare. I focus on two types of trading motives - informational and allocational. I show that while a fully separating equilibrium is the unique equilibrium when trading motives are known, multiple equilibria exist when trading motives are unknown. Moreover, forcing traders to reveal their trading motives may harm welfare. I also use this model to study how an asset market may exit a fire sale equilibrium and how government programs may eliminate private information and improve agents' welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Research Report ; No. 2019-1

Classification and Topics

• Classification: Wirtschaft ; Asset Pricing; Trading Volume; Bond Interest Rates ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; General Financial Markets: Government Policy and Regulation
• Subject: asset markets ; private information ; competitive search ; government intervention

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Wang, Zijian
• Event: Veröffentlichung
• (who): The University of Western Ontario, Department of Economics
• (where): London (Ontario)
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/202455
• Last update: 10.03.2025, 11:45 AM CET