Information Efficiency and Financial Stability

Abstract: The authors study a simple model of an asset market with informed and non-informed agents. In the absence of non-informed agents, the market becomes information efficient when the number of traders with different private information is large enough. Upon introducing non-informed agents, the authors find that the latter contribute significantly to the trading activity if and only if the market is (nearly) information efficient. This suggests that information efficiency might be a necessary condition for bubble phenomena—induced by the behavior of non-informed traders—or conversely that throwing some sands in the gears of financial markets may curb the occurrence of bubbles.

Object Details

• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource
• Language: Englisch

References and Relationships

• Bibliographic citation: Information Efficiency and Financial Stability ; volume:4 ; number:1 ; year:2010 ; extent:21 ; Economics / Journal articles. Journal articles ; 4, Heft 1 (2010) (gesamt 21)

Contributors, Places and Time

• Creator: Caccioli, Fabio ; Marsili, Matteo

Further information

• DOI: 10.5018/economics-ejournal.ja.2010-20
• URN: urn:nbn:de:101:1-2412121801115.937657165383
• Rights: Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
• Last update: 15.08.2025, 7:24 AM CEST