Crès, H. and Tvede, M. (2018) Regulation of trades based on differences in beliefs. European Economic Review, 101. pp. 133-141. ISSN 0014-2921
Abstract
Some trades based on differences in beliefs might cause more harm than good. Should they be restricted? If yes, how? We propose three properties ensuring that regulation does not prevent beneficial trade and is consistent: Unanimity – the regulator should not object to trades with identical beliefs; Merge-Proofness of Autarky – if the regulator does not object to finitely many unrelated trades, all with identical beliefs, then it should not object to the mere juxtaposition of the trades; and Independence of Irrelevant Trade – if the regulator does not object to the juxtaposition of two unrelated trades, then it should not object to any of the two trades standing alone. We show that there is a unique policy having these three properties, namely laissez-faire.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 Elsevier. This is an author produced version of a paper subsequently published in European Economic Review. Uploaded in accordance with the publisher's self-archiving policy. Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/). |
Keywords: | Heterogeneous beliefs; Pareto efficiency; Regulation; Speculative trading |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 06 Jan 2023 15:25 |
Last Modified: | 07 Jan 2023 01:12 |
Published Version: | http://dx.doi.org/10.1016/j.euroecorev.2017.10.001 |
Status: | Published |
Publisher: | Elsevier BV |
Refereed: | Yes |
Identification Number: | 10.1016/j.euroecorev.2017.10.001 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:194802 |
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