Economics at your fingertips  

Limelight on dark markets: Theory and experimental evidence on liquidity and information

Aleksander Berentsen (), Michael McBride () and Guillaume Rocheteau

Journal of Economic Dynamics and Control, 2017, vol. 75, issue C, 70-90

Abstract: We investigate how informational frictions affect trading in decentralized markets in theory and in a laboratory setting. Subjects, matched pairwise at random, trade divisible commodities that have different private values for a divisible asset with a common value (interpreted as money). We compare a bargaining game with complete information with a bargaining game where agents can produce fraudulent assets at some cost and are privately informed about the quality of their assets. The threat of fraud strongly reduces the subjects’ ability to exploit the gains from trade, it reduces significantly both the size of the trade and the acceptability of the asset, but only a small fraction of all assets are actually fraudulent.

Keywords: Liquidity; Money; Information; Experiments (search for similar items in EconPapers)
JEL-codes: G12 G14 E42 D82 D83 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Limelight on dark markets: theory and experimental evidence on liquidity and information (2015) 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:

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-04-17
Handle: RePEc:eee:dyncon:v:75:y:2017:i:c:p:70-90