The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Noise Traders

  • James Dow
  • Gary Gorton
Reference work entry


Noise traders are agents whose theoretical existence has been hypothesized as a way of solving certain fundamental problems in financial economics. We briefly review the literature on noise traders.


‘No trade’ theorem Arbitrage Grossman, S. Hedging Imperfect information revelation Information aggregation and prices Information costs Insurance motive Liquidity traders Market microstructure Market selection hypothesis Noise Noise traders Private information Rational expectations equilibrium 

JEL Classifications

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • James Dow
    • 1
  • Gary Gorton
    • 1
  1. 1.