Publication: Price Destabilizing Speculation
Loading...
Open/View Files
Date
1986
Authors
Published Version
Journal Title
Journal ISSN
Volume Title
Publisher
University of Chicago Press
The Harvard community has made this article openly available. Please share how this access benefits you.
Citation
Hart, Oliver D., and David M. Kreps. 1986. Price destabilizing speculation. Journal of Political Economy 94(5): 927-952.
Abstract
It is sometimes asserted that rational speculative activity must result in more stable prices because speculators buy when prices are low and sell when they are high. This is incorrect. Speculators buy when the chances of price appreciation are high, selling when the chances are low. Speculative activity in an economy in which all agents are rational, have identical priors, and have access to identical information may destabilize prices, under any reasonable definition of destabilization. It takes extremely strong conditions to ensure that speculative activity (of the commodity storage variety) "stabilizes" prices, even in a very weak sense.
Description
Other Available Sources
Research Data
Keywords
Terms of Use
This article is made available under the terms and conditions applicable to Other Posted Material (LAA), as set forth at Terms of Service