Information Search and Financial Markets under COVID-19

Markets for Financial Information

Search Theory in Financial Markets

1. First, a number of financial markets—often called over-the-counter or “OTC” markets—are actually best described by a typical search and bargaining model; in these markets, investors have to locate a counterparty themselves, and once they find a suitable trading partner the two are free to trade at any mutually agreeable price. Hence, these models represent the most natural framework to study...

Information Dispersion in Financial Markets

Public disclosures can level information asymmetry in financial markets by removing informed traders’ advantage, or can exacerbate asymmetry by further increasing these traders’ knowledge of the firm. This study finds evidence of the latter phenomenon in earnings conference calls, where management releases new information, and financial analysts on the call immediately respond and question mana...

Information Communication in Financial Markets∗

Empirical evidence shows word-of-mouth communication has real effects on trading patterns in financial markets. On top of that, the social network through which the information conveys also plays a crucial role. We propose a framework that allows informed traders to directly and truthfully communicate information in four major social interaction structures represented by circle, tree, star and ...

Information Sellers in Financial Markets

This paper analyzes the market for financial information and the incentive of institutions, such as Reuters, to provide information to traders in decentralized financial markets. We derive the following results. (i) The optimal selling strategy consists of selling identical information (Reuters’ screen) to all traders. (ii) The traders buy information from the same providers. If the traders may...