Are Financial Markets Efficient?

Takeover Defense When Financial Markets are (Only) Relatively Efficient

Herd Behavior in Efficient Financial Markets

Rational herd behavior and informationally efficient security prices have long been considered to be mutually exclusive but for exceptional cases. In this paper we describe conditions on the underlying information structure that are necessary and sufficient for informational herding. Employing a standard sequential security trading model, we argue that people may be subject to herding if and on...

Why are Gambling Markets Organized so Differently than Financial Markets?

The market for sports gambling is structured very differently than the typical financial market. In sports betting, bookmakers announce a price, after which adjustments are small and infrequent. Bookmakers do not play the traditional role of market makers matching buyers and sellers, but rather, take large positions with respect to the outcome of game. Using a unique data set, I demonstrate tha...

How Financial Markets are Going On-line

can express their preferences only in terms of ordering among a set of things. If a person is given a choice between A and B, he can say: 1. he prefers A to B, or 2. he prefers B to A, or 3. he is indifferent between the two. Given these expressions of individuals , the social choice model derives a market choice that optimizes the satisfaction of preferences of individual traders. Constraint L...

Why Are Gambling Markets Organised so Differently from Financial Markets?*

The market for sports gambling is structured very differently from the typical financial market. In sports betting, bookmakers announce a price, after which adjustments are small and infrequent. Bookmakers do not play the traditional role of market makers matching buyers and sellers but, rather, take large positions with respect to the outcome of game. Using a unique data set, I demonstrate tha...