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Title: Costly information acquisition, social networks, and asset prices : experimental evidence
Authors: Halim, Edward
Riyanto, Yohanes Eko
Roy, Nilanjan
Keywords: Social sciences::Economic theory
Issue Date: 2019
Source: Halim, E., Riyanto, Y. E. & Roy, N. (2019). Costly information acquisition, social networks, and asset prices : experimental evidence. The Journal of Finance, 74(4), 1975-2010. doi:10.1111/jofi.12768
Journal: The Journal of Finance
Abstract: We design an experiment to study the implications of information networks for incentives to acquire costly information, market liquidity, investors' earnings, and asset price characteristics in a financial market. Social communication crowds out information production as a result of an agent's temptation to free ride on the signals purchased by her neighbors. Although information exchange among traders increases trading volume, improves liquidity, and enhances the ability of asset prices to reflect the available information in the market, it fails to improve price informativeness. Net earnings and social welfare are higher with information sharing due to reduced acquisition of costly signals.
ISSN: 0022-1082
DOI: 10.1111/jofi.12768
Rights: © 2019 The American Finance Association. All rights reserved. This paper was published in The Journal of Finance and is made available with permission of The American Finance Association.
Fulltext Permission: open
Fulltext Availability: With Fulltext
Appears in Collections:SSS Journal Articles

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