Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26481
Authors: 
Angrisani, Marco
Guarino, Antonio
Huck, Steffen
Larson, Nathan
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2436
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

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