How efectively does a decentralized marketplace aggregate information that is dispersed
throughout the economy? We study this question in a dynamic setting where
sellers have private information that is correlated with an unobservable aggregate state.
We rst characterize equilibria with an arbitrary nite number of informed traders. A
common feature is that each seller's trading behavior provides an informative and conditionally
independent signal about the aggregate state. We then ask whether the state
is revealed as the number of informed traders goes to in nity. Perhaps surprisingly, the
answer is no; we provide generic conditions under which information aggregation necessarily
fails. In another region of the parameter space, aggregating and non-aggregating
equilibria can coexist. We then explore the implications for policies meant to enhance
information dissemination in markets. We argue that reporting lags ensure information
aggregation while a partially revealing information policy can increase trading surplus.
regulatory disclosure dynamic investment delegation complementarities Feedback effect cournot competition
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