IDEAS home Printed from https://ideas.repec.org/h/spr/sptchp/978-3-662-59889-4_7.html
   My bibliography  Save this book chapter

7 Information Asymmetries on Financial Markets

In: Solutions to Financial Economics

Author

Listed:
  • Thorsten Hens

    (University of Zurich)

  • Marc Oliver Rieger

    (University of Trier)

Abstract

There are two time periods t = 0, 1 and two states in the second period s = 1, 2. There are two consumers i = 1, 2. The first consumer is rich today and poor tomorrow, w 1 = (1, 0, 0). The second is rich tomorrow and poor today, w 2 = (0, 1, 1). There are two Arrow securities, i.e. A = 1 0 0 1 $$A = \begin {pmatrix}1 & 0 \\ 0 & 1\end {pmatrix}$$ . The first consumer does not know which state occurs and a priori assigns equal probabilities to them. Before trading the asset the second consumer gets a signal revealing the state of the world. Both consumers have ln-utility of wealth, and no time discount rate. All this information is common knowledge. No consumer acts strategically (as if there were two types of infinitely many consumers).

Suggested Citation

  • Thorsten Hens & Marc Oliver Rieger, 2019. "7 Information Asymmetries on Financial Markets," Springer Texts in Business and Economics, in: Solutions to Financial Economics, pages 39-46, Springer.
    • Handle: RePEc:spr:sptchp:978-3-662-59889-4_7
    DOI: 10.1007/978-3-662-59889-4_7
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sptchp:978-3-662-59889-4_7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.