Uninformed Traders in European Stock Markets

Journal title STUDI ECONOMICI
Author/s Salvatore Modica
Publishing Year 2010 Issue 2010/100
Language English Pages 18 P. 157-174 File size 904 KB
DOI 10.3280/STE2010-100009
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

A fully informed agent bets with an uninformed over the capital gains of an asset. A divide-and-choose idea is adapted to induce both trade and revelation of information, but in equlibrium the uninformed buys high and sells low if he is downside risk averse. The result may be seen as an informed-price-maker counterpart of some findings of Glosten-Milgrom (1985) and Kyle (1985) on uninformed agents trading in financial markets.

Keywords: Information transmission, Divide and choose, Downside risk aversion

Jel codes: D82, G14

Salvatore Modica, Uninformed Traders in European Stock Markets in "STUDI ECONOMICI " 100/2010, pp 157-174, DOI: 10.3280/STE2010-100009