UCL logo

UCL Discovery

UCL home » Library Services » Electronic resources » UCL Discovery

Optimal speculative trade among large traders

Eliaz, K.; Spiegler, R.; (2008) Optimal speculative trade among large traders. Review of Economic Design , 12 (1) pp. 45-74. 10.1007/s10058-008-0040-0.

Full text not available from this repository.


A collection of large traders holds heterogeneous prior beliefs regarding market fundamentals. This gives them a motive to engage in speculative trade with respect to market prices. Rather than assuming a particular institution or market for speculative trade, we take a mechanism-design approach by attempting to characterize the mechanism that maximizes the traders’ gains from speculative trade, subject to the incentive constraints that result from the traders’ ability to manipulate market prices. Within a stylized market model, we show that this mechanism affects price volatility without destroying ex-post efficient allocations. We also characterize the implementability of optimal speculative trade when the traders’ prior beliefs are private information.

Type: Article
Title: Optimal speculative trade among large traders
DOI: 10.1007/s10058-008-0040-0
Publisher version: http://dx.doi.org/10.1007/s10058-008-0040-0
Language: English
Keywords: Belief, information
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/17320
Downloads since deposit
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item