Natural selection is used to examine a one-sided buyer auction market. With each trader's behavior preprogrammed with its own inherent and fixed probabilities of overpredicting, predicting correctly and underpredicting the fundamental value of the asset, informational efficiency occurs. If each...

We perform an asset market experiment in order to test the central result coming from the new overconfidence models, namely that high levels of overconfidence lead to enhanced trading activity. We find that overconfidence does engender additional trade. Unlike previous experimental or...

While the literature usually justifies informational efficiency in the context of rationality, this paper shows informational efficiency by applying the evolutionary idea of natural selection. In a dynamic futures market, speculators are assumed to merely act upon their predetermined trading...

This paper constructs a one-period model of a reporting game where the manager is risk neutral and the asset market is perfectly competitive. The manager chooses the level of the accounting earnings to report to the market in order to influence the market value of the firm. The reported earnings...

This paper constructs a model of a standard setting game among informed and uninformed investors, an auditor and standard setters to examine how accounting standard setting interacts with informed and uninformed investors' investment decisions. It proves that the levels of investments of...

This paper presents an one-period model of an one-asset market allowing for the strategic interaction among rational traders and earnings fixated traders. Earnings fixated traders are functionally fixated on the reported earnings numbers in formulating their trading strategies without paying...

This paper presents a static model of a competitive securities market. In the market there are two assets: risk-free asset and risky asset. The payoff of the risk-free asset is one and the payoff of the risky asset is unknown. Rational traders correctly estimate the mean and variance of the...

This paper examines how the investor's belief about the project's ability of generating cash flow affects accounting standard setting. It proves analytically that the accounting standard in the Stackelberg equilibrium of the static model increases with the increase in the investor's belief about...

This paper examines the impact of earnings fixated traders on the asset price in a competitive securities market. In the market, there is a risky asset whose payoff is normally distributed. Earnings fixated traders underestimate the mean and variance of the asset payoff due to the fact that...

This article begins by proposing a random taste parameterization of a quadratic extension of the PIGLOG demand system at the household level, which is consistent with exact aggregation. This variation in tastes is a random function of household characteristics. The econometric implication is...