We examine the competition between a transparent exchange organized as a limit order book and an opaque dark pool in the presence of asymmetric information. We show that the coexistence of a dark pool with an exchange not only enlarges traders' strategy set but may also induce trading venue...

We design a laboratory experiment to test the importance of wealth as a channel for financial contagion across markets with unrelated fundamentals. Specifically, in a sequential global game, we analyze the decisions of a group of investors that hold assets in two markets. We consider two...

In the context of supply function competition with private information, we test in the laboratory whether—as predicted in Bayesian equilibrium—costs that are positively correlated lead to steeper supply functions and less competitive outcomes than do uncorrelated costs. We find that the...

We study the effects of group identity on cooperation in experimental two-person strategic games. Our results show that in games of strategic complements, group identity only matters initially when a participant interacts with another participant of the same group by delivering more cooperative...

We examine price competition with homogeneous products in the presenceof general common ownership arrangements allowing for different corporate control structures. We show that equilibria with positive profits exist (including themonopoly outcome) when the manager places the same weight on the...

We study how inflated credit ratings affect investment decisions in bond markets using experimental coordination games. Theoretical models that feature a feedback effect between capital markets and the real economy suggest that inflated ratings can have both positive and negative real effects....