The Informational Role of Volume Vis-à-Vis No-Trade Results: A Note

The prominent Milgrom-Stokey no-trade theorem shows that differences in private information alone cannot give rise to trade among fully rational agents. In this note we demonstrate that similar no-trade results hold as well for a model introduced recently by Blume, Easly and O'Hara although in this model the agents are only boundedly rational and therefore the Milgrom-Stokey theorem does not apply. Our conclusion is that for an analysis of the informational content of volume one needs a model that contains non-informational reasons for trade in addition to differences in information.