Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100735
Authors: 
Ackert, Lucy F.
Church, Bryan K.
Gillette, Ann B.
Year of Publication: 
2001
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2001-5
Abstract: 
The Federal Reserve has made significant changes in its predisposition to release information over time. This paper reports the results of experimental asset markets designed to investigate how the public disclosure of uncertain information affects market and individual outcomes. In one set of markets, no information is released at the beginning of each trading year. In two other sets, an imperfect pre-announcement of the state of nature is disclosed. The reliability of the pre-announcement (60 percent and 90 percent) varies across treatments. Halfway through each trading year, the state of nature is revealed. By year-end, price deviations from Bayesian predictions are similar across all treatments; however, price volatility is significantly higher and allocational efficiency significantly lower with a pre-announcement that reflects substantial uncertainty. Furthermore, when the reliability of the pre-announcement is low (60 percent), the distribution in profit across traders is significantly greater even though the average profit is similar across treatments. Thus, in a highly uncertain environment better outcomes may actually result when information is withheld.
Subjects: 
Monetary policy
Monetary policy - United States
Financial markets
Document Type: 
Working Paper

Files in This Item:
File
Size
116.58 kB





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