Publications - The Effect of Short–Selling on the Aggregation of Information in an Experimental Asset Market

publications

Details of Publication
Number	2008-26
Title	The Effect of Short–Selling on the Aggregation of Information in an Experimental Asset Market
Type	Working Papers
Author(s)	Vorsatz, Marc. Veiga, Helena.
Date of Publication	09/07/2008
Abstract	We show by means of a laboratory experiment that the relaxation of short–selling constraints causes the price of both an overvalued and an undervalued asset to decrease. Hence, the aggregation of information by the market price becomes better in case the asset is overvalued but worse if the asset is undervalued. With respect to payoffs, we find that not only uninformed but also some of the imperfectly informed traders suffer from the weakening of short–selling constraints.
JEL	C90, G12, G14
Download PDF