Santosh Anagol, Vimal Balasubramaniam, Tarun Ramadorai, 17 January 2019

Although economic agents should discern signals from noise when drawing from experience, recent evidence suggests decision-making can be based on both noise and signal components. This column uses a natural experiment of IPO lotteries in India to show that randomised gains cause winning investors to increase applications to future IPOs and substantially increase portfolio trading volume in non-IPO stocks relative to lottery losers. Investors appear to draw inferences about their skill from noise. 

Manapol Ekkayokkaya, Suppasit Jirajaroenying, Christian Wolff, 09 January 2019

Retail investors are generally considered to be uninformed noise traders, but a recent literature suggests that such investors accumulate novel information about smaller stocks. Using new data from Thailand, this column argues that retail investors systematically outperform institutions, especially domestic institutions. In addition, retail investors have a comparative advantage in executing trades of small stocks. 

Charles Goodhart, 02 March 2015

Following the Warsh Review, the recording, number, and timing of the Bank of England’s Monetary Policy Committee meetings will change. This column argues that the recording may make the decision meeting more formal and could inhibit debate, although the eight-year gap before publishing transcripts ameliorates this concern. Having fewer MPC meetings is a good thing, and reduces ‘noise’ around monetary policy. The revised meeting schedule will not add to transparency and raises the risk of leaks and ‘news shocks’.

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