Transfer of information by an informed trader

Pritha Dev

Finance Research Letters, 2013, vol. 10, issue 2, 58-71

Abstract: This paper analyzes the effect of the transfer of information by an informed strategic trader (owner) to another strategic player (buyer). It shows that while the owner will never fully divulge his information, he may transfer a noisy signal of his information to the buyer. With such a transfer, the owner loses some of his informational superiority and yet increases his trading profit. I also show that if the transfer can be made to more than one buyer, then, the owner’s profit is increasing in the number of other buyers to whom the transfer is made.

Keywords: Market microstructure; Transfer of information (search for similar items in EconPapers)
JEL-codes: D53 D82 G12 G14 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:10:y:2013:i:2:p:58-71

DOI: 10.1016/j.frl.2013.01.002

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