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Tekijä: | Cadsby, C. B. Frank, M. Maksimovic, V. |
Otsikko: | Equilibrium dominance in experimental financial markets |
Lehti: | Review of Financial Studies
1998 : SPRING, VOL. 11:1, p. 189-232 |
Asiasana: | MONEY MARKETS INFORMATION COMPETITIVE ADVANTAGE COMPANIES INVESTORS |
Kieli: | eng |
Tiivistelmä: | This article investigates the predective power of equilibrium dominance in experimental markets where companies with investment opportunities have an informational advantage over potential investors and are permitted to purchase a money-burning signal. When a Pareto-superior sequential equilibrium is also available, equilibrium dominance often fails to predict well. Instead, equilibrium selection appears to be related to the potential earnings of a more valuable firm that can signal its type successfully by defecting from the sequential equilibrium. Potential investors formulate their bids for firm equity based primarily on expectations formed adaptively in response to signaling choices made by companies. |
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