Dark markets: does private information make price formation less efficient? – The Economic Journal and LSE Business Review

Peter Bossaerts and Elena Asparouhova have published a new paper in The Economic Journal using controlled experiments to examine the theory that opaque (or “dark) markets make price formation less efficient. The paper has been featured in the London School of Economics Business Review, where the authors discuss how decentralised trading does not seem to stand in the way of information aggregation, in contrast to the predictions of some standard market theories. This emphasises the urgent need for more rigorous testing of economic theories in carefully controlled experimental settings.

The paper can be found here, and the LSE Business Review here.