The goal of this paper is to study how informational frictions affect asset liquidity in OTC markets in a laboratory setting. The experiments replicate an OTC market similar to the one used in monetary and financial economics (Shi, 1995; Trejos and Wright, 1995; Duffie, Garleanu, and Pedersen, 2005):...

We investigate how informational frictions affect trading in decentralized markets in theory and in a laboratory setting. Subjects, matched pairwise at random, trade divisible commodities that have different private values for a divisible asset with a common value (interpreted as money). We...

We implement multi-sender cheap talk in the laboratory. While full-information transmission is not theoretically feasible in the standard one-sender-one- dimension model, in this setting with more senders and dimensions, full revelation is generically a robust equilibrium outcome. Our...

Theory predicts that committees of experts may take decisions that look good but are bad and that they show a united front to impress evaluators. Although evaluators see through this behavior, committees persist in it only to avoid worse assessments. We investigate this theory in the lab, using...

We study experimentally the effectiveness of communication in common value committees exhibiting publicly known heterogeneous biases. We test models assuming respectively self-interested and strategic-, joint payoff-maximizing- and cognitively heterogeneous agents. These predict varying degrees...

We provide a game theoretic analysis of how power shapes the clarity of communication. We analyze information transmission in a cheap talk bargaining game between an informed Sender and an uninformed Receiver. Theoretically, we find that the maximum amount of information that can be transmitted...

In this paper we attempt to compare theoretically and experimentally three models of strategic information transmission. In particular we focus on the models by Crawford & Sobel (1982), Lai (2010) and Ehses-Friedrich (2011). These three models differ in the information that the receiver...

This paper reports on experiments testing the viability of markets for cheap talk information. We find that the poor quality of the information transmitted leads to a collapse of information markets. The reasons for this are surprising given the previous experimental results on cheap-talk games....

This paper proposes a methodology to implement probabilistic belief elicitation in continuous-choice games. Representing subjective probabilistic beliefs about a continuous variable as a continuous subjective probability distribution, the methodology involves eliciting partial information about...

We propose a simple measure of investor sophistication based on financial statement experience derived from publicly available EDGAR log data about accounting information acquisition activity. This approach allows us to provide unique empirical evidence for the existence of attention induced...