Rubinstein, A.;
Spiegler, R.;
(2008)
Money pumps in the market.
Journal of the European Economic Association
, 6
(1)
pp. 237-253.
10.1162/JEEA.2008.6.1.237.
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Abstract
Agents who employ non-rational choice procedures are often vulnerable to exploitation, in the sense that a profit-seeking trader can offer them a harmful transaction which they will nevertheless accept. We examine the vulnerability of a procedure for deciding whether to buy a lottery: observe another agent who already bought it and buy the lottery if that agent's experience was positive. We show that the exploitation of such agents can be embedded in an inter-temporal market mechanism, in the form of speculative trade in an asset of no intrinsic value.
| Type: | Article |
|---|---|
| Title: | Money pumps in the market |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1162/JEEA.2008.6.1.237 |
| Publisher version: | http://dx.doi.org/10.1162/JEEA.2008.6.1.237 |
| Language: | English |
| Additional information: | © 2008 by the European Economic Association |
| UCL classification: | UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/17313 |
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