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Article Dans Une Revue European Economic Review Année : 2021

Information Aggregation and the Cognitive Make-up of Market Participants

Brice Corgnet
Mark Desantis
  • Fonction : Auteur
David Porter
  • Fonction : Auteur

Résumé

We assess the effect of the cognitive make-up of market participants on the informational efficiency of markets. We put forth that cognitive skills, such as cognitive reflection, are crucial for ensuring the informational efficiency of markets because they endow participants with the ability to infer others’ information from prices. Using laboratory experiments, we show that information aggregation is significantly enhanced when (i) all participants possess high levels of cognitive sophistication and (ii) this high level of cognitive sophistication is common information for all participants. Our findings shed light on the cognitive and informational constraints underlying the efficient market hypothesis.
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Dates et versions

hal-03188235 , version 1 (13-02-2023)

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Paternité - Pas d'utilisation commerciale

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  • HAL Id : hal-03188235 , version 1

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Brice Corgnet, Mark Desantis, David Porter. Information Aggregation and the Cognitive Make-up of Market Participants. European Economic Review, 2021, 133, 15 p. ⟨hal-03188235⟩

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