Header

UZH-Logo

Maintenance Infos

Coordination in the presence of asset markets


Kogan, Shimon; Kwasnica, Anthony M; Weber, Roberto A (2011). Coordination in the presence of asset markets. American Economic Review, 101(2):927-947.

Abstract

We explore the relationship between outcomes in a coordination game and a pre-play asset market where asset values are determined by outcomes in the subsequent coordination game. Across two experiments, we vary the payoffs from the market relative to the game, the degree of interdependence in the game, and whether traders' asset payoffs are dependent on outcomes in their own or another game. Markets lead to significantly lower efficiency across treatments, even when they produce no distortion of incentives in the game. Market prices forecast game outcomes. Our experiments shed light on how financial markets may influence affiliated economic outcomes.

Abstract

We explore the relationship between outcomes in a coordination game and a pre-play asset market where asset values are determined by outcomes in the subsequent coordination game. Across two experiments, we vary the payoffs from the market relative to the game, the degree of interdependence in the game, and whether traders' asset payoffs are dependent on outcomes in their own or another game. Markets lead to significantly lower efficiency across treatments, even when they produce no distortion of incentives in the game. Market prices forecast game outcomes. Our experiments shed light on how financial markets may influence affiliated economic outcomes.

Statistics

Citations

9 citations in Web of Science®
11 citations in Scopus®
Google Scholar™

Altmetrics

Downloads

81 downloads since deposited on 30 Nov 2011
10 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:April 2011
Deposited On:30 Nov 2011 16:41
Last Modified:05 Apr 2016 15:12
Publisher:UNSPECIFIED
ISSN:0002-8282
Publisher DOI:https://doi.org/10.1257/aer.101.2.927

Download

Download PDF  'Coordination in the presence of asset markets'.
Preview
Content: Published Version
Language: English
Filetype: PDF
Size: 695kB
View at publisher