Harris (2002) describes utilitarian traders as market participants that trade in markets for reasons other than...
Harris (2002) describes utilitarian traders as market participants that trade in markets for reasons other than profit. Why do utilitarian traders participate in markets? How do utilitarian traders contribute to well-functioning markets? How do utilitarian traders contribute to market efficiency and/or price discovery?
Homework Answers
According to Harris, there are basically two categories of traders- profit motivated traders and utilitarian traders.
As the name suggests, profit - motivated traders trade mainly driven by the motive of maximizing their profits, whereas utilitarian traders are those traders who expect to receive benefits from trading besides trading profits.
Some of the examples of utilitarian traders are investors, borrowers, hedgers, and tax avoiders etc.
In fact the existence of markets for trade is dependent on existence or presence of utilitarian traders. Without presence of them, there would be no investors, borrowers etc.
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