Much of the blame for the current financial crisis is attributable to problems in the subprime mortgage market. In this Article we argue that changes in the nature of the mortgage contract make it both legally plausible and normatively desirable that subprime mortgages brokers be treated as...

Market microstructure research has provided important insights into the operation and behavior of securities markets and into the intra-day behavior of asset prices. What has not yet been established is how market microstructure affects economic behavior more generally. This article focuses on...

This paper uses experimental asset markets to investigate the evolution of liquidity in anelectronic limit order market. Our market setting includes salient features of electronic markets, as well as informed traders and liquidity traders. We focus on the strategies of the traders, andhow these...

In this research we investigate the behavior of noise traders and their impact on the market. We do this in an experimental market setting that allows us to determine not only how noise traders fare in a competitive asset market with other traders, but also how the equilibrium changes if a...

Exchange traded funds (ETFs) have a novel design that allows them to “open up” illiquid markets hitherto resistant to index products. We demonstrate that such ETFs also have the potential to alter the informational efficiency of underlying markets and introduce fragility via herding....

Beginning in early 2021, surging volume in Berkshire Hathaway A (BRK.A) has captured the attention of market watchers. Averaging volume of just 375 shares a day over the previous decade, the market’s most expensive stock routinely traded additional volume equivalent to more than a billion...

We examine the role of insurance companies as value investors in the corporate bond market. We show that during the COVID-19 liquidity crisis, insurers acted as “buyers of last resort” and increased their corporate bond positions, particularly in bonds facing fire sales by mutual funds....

This paper provides a critical appraisal of the March 2020 crisis in fixed income markets. We synthesize the main events, characterize what appears to be an emerging consensus on what caused the market breakdowns, summarize how the Fed’s actions contributed to its resolution, and discuss...