The wisdom of the crowd in dynamic economies
The wisdom of the crowd applied to financial markets asserts that prices represent a consensus belief that is more accurate than individual beliefs. However, a market selection argument implies that prices eventually reflect only the beliefs of the most accurate agent. In this paper, we show how to reconcile these alternative points of view. In markets in which agents naively learn from equilibrium prices, a dynamic wisdom of the crowd holds. Market participation increases agents' accuracy, and equilibrium prices are more accurate than the most accurate agent.
Year of publication: |
2020
|
---|---|
Authors: | Dindo, Pietro ; Massari, Filippo |
Published in: |
Theoretical Economics. - The Econometric Society, ISSN 1933-6837, ZDB-ID 2220447-7. - Vol. 15.2020, 4, p. 1627-1668
|
Publisher: |
The Econometric Society |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
The wisdom of the crowd in dynamic economies
Dindo, Pietro, (2020)
-
The Wisdom of the Crowd in Dynamic Economies
Dindo, Pietro, (2018)
-
The wisdom of the crowd in dynamic economies
Dindo, Pietro, (2020)
- More ...