Experimental anaysis of decentralized trading markets

Projet porté par Nobuyuki Hanaki du GREDEG.

In this project we aim to better understand the functioning of Over-the-counter (OTC) markets. We are interested in OTC markets because there are serious concerns from regulators about how size of the OTC market, its global dimension, and its lack of adequate regulations, have the potential to create significant risks to the overall financial system, and many commentators and policy makers have blamed decentralized trading for the inability of traders to find counter-parties to trade and identify prices of assets, exacerbating the crisis. For this purpose, in this particular project, we aim to answer the following research questions by employing controlled laboratory experiments. (1) Does the ability of insider(s) to disseminate information in an OTC market related to the network structure? (2) Does the behavior of insider(s) in OTC market depend on the network structure? (3) Do competitions among insiders facilitate the dissemination of information? (4) Do the information mirages observed in OTC market without insiders? Better understanding of the answer to these questions will be an important step in addressing the concerns from regulators, and our analyses will be a basis for future research that aims to test effect of various regulatory and policy interventions.

Partenaires :

  GREDEG

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Créé le 23 février 2021