We investigate reference point formation in a social network of multiple investors and study its impact on wealth growth and inequality under a framework of Prospect Theory. The reference point of each individual investor contains both personal and social components. Whereas the personal...

This paper revisits the efficiency of a rational expectations equilibrium model of a competitive market from the perspective of the incentive to social communication. The classical result tells us that the equilibrium price perfectly reveals all dispersed information in the market when the...

We study a rational expectations equilibrium economy where agents learn from the actions of others by adopting the simple average of ex ante optimal strategies of their social network. When information is exogenous, large social networks benefit all agents if and only if agents are relatively...