Insider behavior under different market structures: experimental evidence on trading patterns, manipulation, and profitability

Philipp Hornung (), Ulrike Leopold-Wildburger (), Roland Mestel () and Stefan Palan ()

Central European Journal of Operations Research, 2015, vol. 23, issue 2, 357-373

Abstract: We conduct laboratory experiments incorporating different market structures and insiders who compete with imperfectly informed traders. The insiders possess perfect information regarding the fundamental value of the tradable asset, whereas the imperfectly informed participants receive a noisy signal of fundamental value. In addition to the two trader types, we vary the market design by using either a stand-alone continuous double auction market or a continuous double auction market preceded by either a transparent or a nontransparent opening call auction. The results provide insights into whether and how insiders try to stay undetected, how their profits are accumulated and what market structures are advantageous for insiders. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Insider trading; Call auction; Continuous double auction; Transparency (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s10100-014-0359-2

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Central European Journal of Operations Research is currently edited by Ulrike Leopold-Wildburger

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