Optimal financial education
When agents first invest in financial markets, they are relatively inexperienced. The agents best positioned to educate the inexperienced stand to earn trading profits at the expense of inexperienced agents. Owing to this phenomenon, we show that the equilibrium amount of financial education does not fully correct the biases of the inexperienced agents. In a dynamic setting, large levels of uninformed trading volume may be generated by the inexperienced agents. This is because, in equilibrium, the experienced intermediaries may delay educating the inexperienced in order to earn commissions in earlier rounds of trade.
Year of publication: |
2009
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Authors: | Subrahmanyam, Avanidhar |
Published in: |
Review of Financial Economics. - Elsevier, ISSN 1058-3300. - Vol. 18.2009, 1, p. 1-9
|
Publisher: |
Elsevier |
Subject: | Information Market efficiency |
Saved in:
Online Resource
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