No-Trade in the Laboratory

Marco Angrisani, Antonio Guarino, Steffen Huck and Nathan Larson

No 2436, CESifo Working Paper Series from CESifo

Abstract: We test the no-trade theorem in a laboratory financial market where subjects can trade an asset whose value is unknown. Subjects receive clues on the asset value and then set a bid and an ask at which they are willing to buy or to sell from the other participants. In treatments with no gains from trade, theory predicts no trading activity, whereas, in treatments with gains, trade becomes theoretically possible. Our experimental results show that subjects fail to reach the no-trade equilibrium by pure introspection, but they learn to approach it over time, through market feedback and learning.

Keywords: no-trade theorem; experiment (search for similar items in EconPapers)
JEL-codes: C92 D80 G12 G14 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: No-Trade in the Laboratory (2011)
Working Paper: No-Trade in the Laboratory (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2436

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