INFORMATION REVELATION IN A MARKET WITH PAIRWISE MEETINGS

The paper presents a simple pairwise meetings model of trade. The new feature is that agents have asymmetric information about the true state of the world. The focus is on the transmission of the information through the process of trade. The qualitative questions is: to what extent is the information revealed to uninformed agents through the trading process, when the market is in some sense frictionless? In particular: does the decentralized process give rise to full revelation results as derived by the literature on rational expectations for centralized and competitive environments? In the context of the model of this paper, it turns out that the information is not fully revealed to uninformed agents, even when the market is in some sense approximately frictionless.


Issue Date:
Sep 09 1987
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/268243
Language:
English
Total Pages:
41




 Record created 2018-02-13, last modified 2018-02-13

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