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Private information in futures markets: An experimental study
Author(s) -
Dodonova Anna,
Khoroshilov Yuri
Publication year - 2018
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2868
Subject(s) - futures contract , private information retrieval , quality (philosophy) , inside information , information quality , economics , financial economics , microeconomics , business , actuarial science , information system , computer science , computer security , law , political science , philosophy , epistemology
This paper presents the results of an experimental study on how people use their private information to estimate the “fair” futures price and how the quality of this information affects the traders' behavior and desire to trade. It finds that subjects are able to use their information correctly and that their desire to rely on it depends positively on the information precision. It shows that subjects are able to recognize that they are expected to lose money on futures trading when other traders have better quality information. However, subjects failed to recognize the symmetry of the futures contracts.