Networks Webinar Series - Lasse Pedersen
The Janeway Institute hosts the Networks Webinar Series which is organised by George Charlson, Sanjeev Goyal, Matt Elliott and Akhil Vohra.
On Friday 11th February 2022, 14.00 - 15.00, the speaker will be Lasse Pedersen (Copenhagen Business School and NYU)
Title: Game On: Social Networks and Markets
Link to paper
I present closed-form solutions for prices, portfolios, and beliefs in a model where four types of investors trade assets over time: naive investors who learn via a social network, ``fanatics'' possibly spreading fake news, and rational short- and long-term investors. I show that fanatic and rational views dominate over time, and their relative importance depends on their following by influencers. Securities markets exhibit social network spillovers, large effects of influencers and thought leaders, bubbles, bursts of high volume, price momentum, fundamental momentum, and reversal. The model sheds new light on the GameStop event, historical bubbles, and asset markets more generally.
Lasse is a financial economist who loves to solve real-world problems using models and data.