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Inequalities in financial markets: Evidences from a laboratory experiment

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  • Morone, Andrea
  • Caferra, Rocco

Abstract

The purpose of this paper is to examine the effects on welfare distribution of quality and quantity of information among traders in laboratory financial markets. Results lead us to conclude that signal accuracy matters in underpinning inequality distribution. Generally, there is evidence that high quality signals produce lower inequality. However, by analyzing tail behavior, there seems to be cases of overconfidence in high quality signals generating "extra" level of inequality.

Suggested Citation

  • Morone, Andrea & Caferra, Rocco, 2020. "Inequalities in financial markets: Evidences from a laboratory experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 88(C).
    • Handle: RePEc:eee:soceco:v:88:y:2020:i:c:s2214804320302809
    DOI: 10.1016/j.socec.2020.101584
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    References listed on IDEAS

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    Cited by:

    1. Rocco Caferra & Gabriele Tedeschi & Andrea Morone, 2023. "Agents interaction and price dynamics: evidence from the laboratory," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(2), pages 251-274, April.
    2. Robert Merl, 2021. "Literature Review of Experimental Asset Markets with Insiders," Working Paper Series, Social and Economic Sciences 2021-04, Faculty of Social and Economic Sciences, Karl-Franzens-University Graz.
    3. Merl, Robert, 2022. "Literature review of experimental asset markets with insiders," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).

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