"Impossibility of speculation" theorems with noisy information

Doron Sonsino ()

Games and Economic Behavior, 1995, vol. 8, issue 2, 406-423

Abstract: The "impossibility of speculations" result implied by some models of information economics seems to follow directly from the strong assumptions concerning the information structure in the relevant models. This paper investigates whether the impossibility result hold when some "noise" is introduced into the information system in a "no trade" model. It is proved that when the degree of noise approaches zero, the noisy model converges to the impossibility result of the no-noise model. Yet it is shown that the introduction of some positive noise into the information system can disrupt the impossibility result in many applications. Journal of Economic Literature Classification Numbers: 024, 026.

Date: 1995
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Citations: View citations in EconPapers (7)

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