Evans, Martin D. D. (contributor); … - 2004
Milgrom 1985, Kyle 1985). The causal role arises because transactions convey
information that is not common knowledge. In … common-knowledge (or “mean”) part: all agents agree about the appropriate impact of this
first part on the exchange rate. In … knowledge.
It is this second part that is impounded in exchange rates via induced trading. Suppose, for
example, that all …