News, Competition and Trade Dynamics
Event details
| Date | 18.03.2016 |
| Hour | 10:30 › 12:00 |
| Speaker | Brendan DALEY (Duke University) |
| Location | |
| Category | Conferences - Seminars |
We study the effect of news on the trade dynamics of an asset whose owner possesses private information about its value. We pay particular attention to how these effects depend on the degree of competition among buyers. Because traders in our model are fully strategic, it is not only the realization of news, but also anticipation of news that determine the likelihood and terms of trade, leading to several novel results. In particular, there exists states in which more accurate news or greater competition among buyers impedes efficient trading. A key insight is that changes in the level of buyer competition alter the relative market/bargaining power of buyers vs. sellers, who have different expectations about the realization of future news.
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