Market selection in large economies : A matter of luck
In a general equilibrium model with a continuum of traders and bounded aggregate endowment, I investigate the market selection hypothesis that markets favor traders with accurate beliefs. Contrary to known results for economies with (only) finitely many traders, I find that risk attitudes affect traders' survival and that markets can favor “lucky” traders with incorrect beliefs over “skilled” traders with accurate beliefs. My model allows for a clear distinction between luck and skills, and it shows that market selection forces induce efficient prices even when accurate traders do not survive in the long run.
Year of publication: |
2019
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Authors: | Massari, Filippo |
Published in: |
Theoretical Economics. - The Econometric Society, ISSN 1933-6837, ZDB-ID 2220447-7. - Vol. 14.2019, 2, p. 437-473
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Publisher: |
The Econometric Society |
Saved in:
Online Resource
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