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Complementarities, multiplicity, and supply information

Ganguli, JV and Yang, L (2009) 'Complementarities, multiplicity, and supply information.' Journal of the European Economic Association, 7 (1). 90 - 115. ISSN 1542-4766

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Abstract

If traders can obtain private information about the payoff and the supply of a stock then there can exist (i) complementarity in information acquisition and (ii) multiple equilibria in the financial and information markets. The additional dimension of supply information increases coordination possibilities in the financial market, leading to multiple equilibria. The existence of two information sources can lead to information acquisition being complementary. The multiplicity of equilibria is suggestive of excess volatility and crashes. The different financial market equilibria imply differing patterns of cost of capital and volume of trade. © 2009 by the European Economic Association.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 14 Feb 2013 16:14
Last Modified: 23 Jan 2019 00:15
URI: http://repository.essex.ac.uk/id/eprint/5633

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