How trade splits up information sets and dealers carry out their brokerage of asymmetric information

Rodolfo Apreda ()

No 288, CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA

Abstract: n this paper we set forth a new perspective from which to understand and measure the brokerage of asymmetric information that intermediaries usually carry out. Firstly, we deal with partitions of a given set so as to lay grounds to our line of research. Secondly, we argue that trade splits up imperfect information sets, over which traders try to negotiate and profit, but also hide their opportunistic behavior from their counterparts. Next, the brokerage of asymmetric information is framed so as to stress the fact that any exchange is dual, entailing not only bargaining property rights but also information value. Lastly, we bring to light the linkage between differential rates, residual information sets and trading environments, which seems to be a functional toolkit for assessing how much asymmetric information is brokered eventually.

Keywords: asymmetric information; brokerage; differential rates; residual information sets; financial intermediaries (search for similar items in EconPapers)
JEL-codes: G14 D82 D80 C78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fin and nep-fmk
Date: 2005-03
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Persistent link: http://EconPapers.repec.org/RePEc:cem:doctra:288

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