| 1. |
- Huber, Jürgen, et al.
(author)
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Is more information always better? Experimental financial markets with cumulative information
- 2008
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In: Journal of Economic Behavior and Organization. - 0167-2681. ; 65:1, s. 86-104
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Journal article (peer-reviewed)abstract
- We study the value of information in financial markets by asking whether having more information always leads to higher returns. We address this question in an experiment where information about an asset's intrinsic value is cumulatively distributed among traders. We find that only the very best informed traders (i.e., insiders) significantly outperform less informed traders. However, there is a wide range of information levels (from zero information to above average information levels) where additional information does not yield higher returns. The latter result implies that the value of additional information need not be strictly positive.
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| 2. |
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| 3. |
- Sutter, Matthias, 1968, et al.
(author)
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Bubbles and information. An experiment
- 2012
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In: Management Science. - : Institute for Operations Research and the Management Sciences (INFORMS). - 0025-1909 .- 1526-5501. ; 58:2, s. 384-393
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Journal article (peer-reviewed)abstract
- A symmetric distribution of information, although omnipresent in real markets, is rarely considered in experimental economics. We study whether information about imminent future dividends can abate bubbles in experimental asset markets. We find that markets with asymmetrically informed traders have significantly smaller bubbles than markets with symmetrically informed or uninformed traders. Hence, fundamental values are better reflected in market prices—implying higher market efficiency—when some traders know more than others about future dividends. This suggests that bubbles are abated when traders know that a subset of them have an edge (in information) over others.
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