No-Trade in the Laboratory

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.no-trade theorem, experiment

No-Trade in the Laboratory

We test the no-trade theorem in a laboratory nancial 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.

No Trade, Informed Trading, and Accuracy of Information

We present a model in which there is uncertainty about realization of a risky asset value for an informed trader. We introduce two states such that in the "narrow" state the informed trader has better information than in the "wide" state. Then, we show that the informed trader in the wide state does not trade in equilibrium if the information that the informed trader with better information has is sufficiently accurate and the probability of the narrow state is sufficiently high. We use the framework presented by Glosten and Milgrom (1985) and extend the assumption that the informed trader knows the terminal value of the risky asset. Finally, we obtain the conditions under which the informed trader would not trade in equilibrium.Market microstructure; Glosten-Milgrom; Price formation; Asymmetric information; Bid-ask spreads.

No Trade, Informed Trading, and Accuracy of Information.

We present a model in which there is uncertainty about realization of a risky asset value for an informed trader. Then, we show that the informed trader does not trade in equi- librium if the inside information the informed trader has is not sufficiently accurate. We use the framework presented by Glosten and Milgrom (1985) and extend the assumption that the informed trader knows the terminal value of the risky asset. Finally, we obtain the conditions under which the informed trader would not trade in equilibrium.

Family size and child outcomes: Is there really no trade-off?

Recent empirical work questions the negative relationship between family size and children’s attainments proposed by theoretical work and supported by a large empirical literature. We use twin births as an exogenous source of variation in family size in an unusually rich dataset where it is possible to separately look at intermediate and long run outcomes. We find little evidence of a causal effect on long term outcomes such as years of schooling and earnings, and studies that do not take selection effects into account are likely to overstate the effects. We do, however, find a small but significant negative impact of family size on grades in compulsory and secondary school.Family size; twin births; education; earnings

Trading Volumes in Dynamically Efficient Markets

The classic Lucas asset pricing model with complete markets stresses aggregate risk and, hence, fails to investigate the impact of agents heterogeneity on the dynamics of the equilibrium quantities and measures of trading volume. In this paper, we investigate under what conditions non-informational heterogeneity, i.e. differences in preferences and endowments, leads to non trivial trading volume in equilibrium. Our main result comes in form of a non-informational no trade theorem which provides necessary and sufficient conditions for zero trading volume in a dynamically efficient, continuous time Lucas market model with multiple goods and securities.General Equilibrium, Trading Volume; heterogenous agents; multiple goods; incomplete markets; no-trade theorem.

Speculative Trade under Unawareness: The Infinite Case

We generalize the "No-trade" theorem for finite unawareness belief structures in Heifetz, Meier, and Schipper (2009) to the infinite case.Awareness; unawareness; speculation; trade; agreement; common prior; common certainty