Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26481 
Year of Publication: 
2008
Series/Report no.: 
CESifo Working Paper No. 2436
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We test the no-trade theorem in a laboratory financial market where subjects can trade an asset whose value is unknown. Subjects receive clues on the asset value and then set a bid and an ask at which they are willing to buy or to sell from the other participants. In treatments with no gains from trade, theory predicts no trading activity, whereas, in treatments with gains, trade becomes theoretically possible. Our experimental results show that subjects fail to reach the no-trade equilibrium by pure introspection, but they learn to approach it over time, through market feedback and learning.
Subjects: 
No-trade theorem
experiment
JEL: 
C92
D8
G12
G14
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
660.12 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.