This paper analyzes the market for financial information and the incentive of institutions, such as Reuters, to provide information to traders in decentralized financial markets. We derive the following results. (i) The optimal selling strategy consists of selling identical information (Reuters’ screen) to all traders. (ii) The traders buy information from the same providers. If the traders may...

Empirical evidence shows word-of-mouth communication has real effects on trading patterns in financial markets. On top of that, the social network through which the information conveys also plays a crucial role. We propose a framework that allows informed traders to directly and truthfully communicate information in four major social interaction structures represented by circle, tree, star and ...

Regulations that require asset issuers to disclose payoff-relevant information to potential buyers sound like obvious measures to increase investor welfare. But in many cases, such regulations harm investors. In an equilibrium model, asset returns compensate investors for risk. By making payoffs less uncertain, disclosure reduces risk and therefore reduces return. As high-risk, high-return inve...

We provide a production?based asset pricing model with dispersed information and small deviations from full rational expectations. In the model, aggregate output equity prices depend on higher?order beliefs about demand individual stochastic discount factors. prove that price volatility becomes arbitrarily large as of idiosyncratic shocks diverges to infinity due interaction signal extraction t...