EconPapers    
Economics at your fingertips  
 

Costly Information Acquisition, Social Networks, and Asset Prices: Experimental Evidence

Edward Halim, Yohanes Riyanto () and Nilanjan Roy

Journal of Finance, 2019, vol. 74, issue 4, 1975-2010

Abstract: We design an experiment to study the implications of information networks for incentives to acquire costly information, market liquidity, investors' earnings, and asset price characteristics in a financial market. Social communication crowds out information production as a result of an agent's temptation to free ride on the signals purchased by her neighbors. Although information exchange among traders increases trading volume, improves liquidity, and enhances the ability of asset prices to reflect the available information in the market, it fails to improve price informativeness. Net earnings and social welfare are higher with information sharing due to reduced acquisition of costly signals.

Date: 2019
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/jofi.12768

Related works:
Working Paper: Costly Information Acquisition, Social Networks and Asset Prices: Experimental Evidence (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:74:y:2019:i:4:p:1975-2010

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-10-21
Handle: RePEc:bla:jfinan:v:74:y:2019:i:4:p:1975-2010