I study competitive equilibria of economies where assets are heterogeneous and traders have heterogeneous information about them. Markets are defined by a price and a procedure for clearing trades. Any asset can in principle be traded in any market but traders can use their information to impose acceptance rules which specify which goods they are willing to trade in each market. I then use the framework to ask whether asymmetric information can account for fire sales: sharp drops in prices when distressed agents need to sell assets. Standard models with identical uninformed buyers predict the opposite phenomenon, as more distressed sellers on average sell less-adversely-selected pools of assets. With heterogeneity among buyers in their ability to distinguish assets of different qualities, the possibility of fire sales depends on the joint distribution of wealth and ability.

Ph.D. in Economics, MIT

Assistant Professor, Stanford University