Paper #1877

Título:

Centralized vs decentralized markets: The role of connectivity

Autores:

Simone Alfarano, Albert Banal-Estañol, Eva Camacho, Giulia Iori, Burcu Kapar y Rohit Rahi

Fecha:

Enero 2024

Resumen:

We consider a setting in which privately informed agents are located in a network and trade a risky asset with other agents with whom they are directly connected. We compare the performance, both theoretically and experimentally, of a complete network (centralized market) to incomplete networks with differing levels of connectivity (decentralized markets). We show that decentralized markets can deliver higher informational efficiency, with prices closer to fundamentals, as well as higher welfare for mean-variance investors.

Palabras clave:

Networks, heuristic learning, informational efficiency, experimental asset markets

Códigos JEL:

C92, D82, G14

Área de investigación:

Economía de la Empresa y Organización Industrial

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