No-trade theorem

The No-Trade Theorem is an important concept in the field of finance and economics, particularly in the context of markets and information asymmetry. The theorem, which has roots in the theory of rational expectations and the theory of incomplete markets, states that if all market participants are rational and have common prior beliefs (i.e., they share the same initial beliefs about future states of the world), then there will be no trade in securities that depend solely on these common beliefs.