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What is Limits of Noise Trading in Markets about?
This document summarizes a research paper that experimentally analyzes the behavior and impact of noise traders in asset markets. The experiment distinguishes between informed traders who have private information, liquidity traders who need to trade for external reasons, and noise traders who trade without private information or external trading needs. The study finds that: 1) Noise traders drive prices away from fundamental values and decrease market efficiency, especially when true values differ significa
- Author
- Dwight Thoth
- Language
- EN