Abstract

http://ssrn.com/abstract=1907317
 


 



Smart Money, Dumb Money, and Learning Type from Price


J.B. Heaton


Independent; Bartlit Beck Herman Palenchar & Scott LLP

Nick Polson


University of Chicago - Booth School of Business

June 2012


Abstract:     
We present a simple model of smart money and dumb money. Dumb money tries to learn from market prices whether or not it is dumb. Dumb money's ability to learn depends on its openness to the idea that it may be the dumb money and on its ability to assess the total amount of dumb money in the market. Neither requirement may be met easily in the real world.

Number of Pages in PDF File: 23

Keywords: smart money, dumb money, noise traders, limits of arbitrage, learning, heterogeneous beliefs

JEL Classification: G10, G12

working papers series


Download This Paper

Date posted: August 9, 2011 ; Last revised: June 15, 2012

Suggested Citation

Heaton, J.B. and Polson, Nick, Smart Money, Dumb Money, and Learning Type from Price (June 2012). Available at SSRN: http://ssrn.com/abstract=1907317 or http://dx.doi.org/10.2139/ssrn.1907317

Contact Information

J.B. Heaton (Contact Author)
Independent
No Address Available
Bartlit Beck Herman Palenchar & Scott LLP ( email )
Courthouse Place
54 West Hubbard Street
Chicago, IL 60610
United States
312-494-4425 (Phone)
312-494-4440 (Fax)
Nick Polson
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7513 (Phone)
773-702-0458 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 2,496
Downloads: 206
Download Rank: 81,856

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.437 seconds