Download this Paper Open PDF in Browser

Puzzle Solver

47 Pages Posted: 19 Oct 2009 Last revised: 16 Dec 2009

Christian Müller-Kademann

Jacobs University

Date Written: October 15, 2009


This paper presents a model for asset markets with a subjectively rational solution for the price of the traded asset. Traders cannot act objectively rational and an increase in the number of traders does not enlarge the information set neccessary for determining the "true'' price. Consequentely, many well-known "puzzles'' vanish as there is no objective truth to which data could live up. An empirical test is conducted which demonstrates the relevance of the argument across time, space, and markets.

Keywords: rational expectations, uncertainty, Tobin tax, financial crisis

JEL Classification: F31, F47, C53

Suggested Citation

Müller-Kademann, Christian, Puzzle Solver (October 15, 2009). Available at SSRN: or

Christian Müller-Kademann (Contact Author)

Jacobs University

Campus Ring 1
Research V, Room 40
Bremen, 28759


Paper statistics

Abstract Views