Disagreement-Based Trading and Speculation: Implications for Financial Regulation and Economic Theory

Accounting, Economics, and Law: A Convivium, Vol. 1, 2011

Posted: 14 Feb 2011

See all articles by Yuri Biondi

Yuri Biondi

French National Center for Scientific Research (CNRS)

Date Written: February 14, 2011

Abstract

Lynn Stout’s paper on Risk, Speculation, and OTC Derivatives: An Inaugural Essay for Convivium develops an insightful legal-economic analysis of speculative trading. From one hand, the paper discusses the legal-economic framework of speculation and its recent transformation, making reference to the case of derivatives markets crash (and related financial crisis) of 2007. From another hand, the paper foreshadows a thought-provoking economic model of trade (and speculation) based on disagreement, advocating further developments that take into account market manipulation and conflict of interest, whilst relaxing alleged assumptions (and beliefs) on universal fundamental value and perfect forecasting.

Keywords: economic theory, financial regulation, speculation, hedging, heterogeneous beliefs

JEL Classification: D53, D82, D84, G01, G28, K20, B10, C70, D14

Suggested Citation

Biondi, Yuri, Disagreement-Based Trading and Speculation: Implications for Financial Regulation and Economic Theory (February 14, 2011). Accounting, Economics, and Law: A Convivium, Vol. 1, 2011. Available at SSRN: https://ssrn.com/abstract=1761291

Yuri Biondi (Contact Author)

French National Center for Scientific Research (CNRS) ( email )

IRISSO - University Paris Dauphine PSL
Place Marechal Lattre Tassigny
75016 Paris
France

HOME PAGE: http://yuri.biondi.free.fr/

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