Insider trading with public and shared information

Hong Liu and Zhixiang Zhang

Economic Modelling, 2011, vol. 28, issue 4, 1756-1762

Abstract: We study the impact of public information and shared information on traders' trading behavior in the context of Kyle's (1985) speculative market. We suppose that there are four types of traders in our model: one insider, M outsiders, liquidity traders, and market makers. We explicitly describe the unique linear Nash equilibrium and find that public information harms the insider but benefits the outsiders and noise traders. Also, the market is more efficient because of the existence of public information.

Keywords: Market; makers; Noise; traders; Inside; trading; Public; information; Private; information; Nash; equilibrium (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (23)

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