This program sets up an asset market in which traders are given
endowments of cash and asset "shares" with random dividends.
Cash may be kept in a safe account with a fixed
Final-period redemption values may either be known or random.
With random redemption values, private information signals about the
unknown common redemption value may be given to "insiders."
Traders submit buy or sell limit orders that are ranked and "crossed"
to determine a uniform market-clearing price.
The instructor may press a Stop Trading button to "call" the market if
some traders are inactive.
| || || || || ||The interest rate for cash induces a time preference and that determines the fundamental (present)
value of a share. Trading prices can be compared with the fundamental values
to identify bubbles or crashes driven by expectations.
These topics are covered in Chapter 14 of Holt (2006)
Markets, Games, and Strategic Behavior,
Vecon Lab - February 20, 2020