Costly information acquisition, social networks, and asset prices : experimental evidence

Costly information acquisition, social networks, and asset prices : experimental evidence

We design an experiment to study the implications of information networks for incentives to acquire costly information, market liquidity, investors' earnings, and asset price characteristics in a financial market. Social communication crowds out information production as a result of an agent�...

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Main Authors: Halim, Edward, Riyanto, Yohanes Eko, Roy, Nilanjan
Other Authors: School of Social Sciences
Format: Article
Language:English
Published: 2020
Subjects:
Social sciences::Economic theory
Social Networks
Asset Prices
Online Access:https://hdl.handle.net/10356/142871
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Institution: Nanyang Technological University
Language: English
id sg-ntu-dr.10356-142871
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spelling sg-ntu-dr.10356-1428712020-07-06T07:18:41Z Costly information acquisition, social networks, and asset prices : experimental evidence Halim, Edward Riyanto, Yohanes Eko Roy, Nilanjan School of Social Sciences Social sciences::Economic theory Social Networks Asset Prices We design an experiment to study the implications of information networks for incentives to acquire costly information, market liquidity, investors' earnings, and asset price characteristics in a financial market. Social communication crowds out information production as a result of an agent's temptation to free ride on the signals purchased by her neighbors. Although information exchange among traders increases trading volume, improves liquidity, and enhances the ability of asset prices to reflect the available information in the market, it fails to improve price informativeness. Net earnings and social welfare are higher with information sharing due to reduced acquisition of costly signals. MOE (Min. of Education, S’pore) Accepted version 2020-07-06T07:18:40Z 2020-07-06T07:18:40Z 2019 Journal Article Halim, E., Riyanto, Y. E. & Roy, N. (2019). Costly information acquisition, social networks, and asset prices : experimental evidence. The Journal of Finance, 74(4), 1975-2010. doi:10.1111/jofi.12768 0022-1082 https://hdl.handle.net/10356/142871 10.1111/jofi.12768 2-s2.0-85062972562 4 74 1975 2010 en The Journal of Finance © 2019 The American Finance Association. All rights reserved. This paper was published in The Journal of Finance and is made available with permission of The American Finance Association. application/pdf
institution Nanyang Technological University
building NTU Library
country Singapore
collection DR-NTU
language English
topic Social sciences::Economic theory
Social Networks
Asset Prices
spellingShingle Social sciences::Economic theory
Social Networks
Asset Prices
Halim, Edward
Riyanto, Yohanes Eko
Roy, Nilanjan
Costly information acquisition, social networks, and asset prices : experimental evidence
description We design an experiment to study the implications of information networks for incentives to acquire costly information, market liquidity, investors' earnings, and asset price characteristics in a financial market. Social communication crowds out information production as a result of an agent's temptation to free ride on the signals purchased by her neighbors. Although information exchange among traders increases trading volume, improves liquidity, and enhances the ability of asset prices to reflect the available information in the market, it fails to improve price informativeness. Net earnings and social welfare are higher with information sharing due to reduced acquisition of costly signals.
author2 School of Social Sciences
author_facet School of Social Sciences
Halim, Edward
Riyanto, Yohanes Eko
Roy, Nilanjan
format Article
author Halim, Edward
Riyanto, Yohanes Eko
Roy, Nilanjan
author_sort Halim, Edward
title Costly information acquisition, social networks, and asset prices : experimental evidence
title_short Costly information acquisition, social networks, and asset prices : experimental evidence
title_full Costly information acquisition, social networks, and asset prices : experimental evidence
title_fullStr Costly information acquisition, social networks, and asset prices : experimental evidence
title_full_unstemmed Costly information acquisition, social networks, and asset prices : experimental evidence
title_sort costly information acquisition, social networks, and asset prices : experimental evidence
publishDate 2020
url https://hdl.handle.net/10356/142871
_version_ 1681059605849833472

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