3 ms·
I think buyers and sellers both having perfect information is a prerequisite and a much larger barrier than rationality. https://en.wikipedia.org/wiki/The_Mark
by minikites 13y ago
I think buyers and sellers both having perfect information is a prerequisite and a much larger barrier than rationality.
https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons
- FD3SA 13y agoPrecisely. Information asymmetry is what allows the exchanges to be profitable. It is a continuous wealth transfer along the information gradient, with the most knowledgeable investors capturing most of the wealth from the least knowledgeable. As long as this asymmetry exists, the vast majority of trades will constitute a zero sum wealth transfer.