Informed and Uninformed Trading With Correlated Assets: An Experimental Study

Philippe Grégoire and Jonathan Coupland

Journal of Behavioral Finance, 2018, vol. 19, issue 4, 407-420

Abstract: The authors examine the use of market and limit orders by informed and uninformed traders in an experimental market with 2 correlated assets. Some traders receive private information about one asset, referred to as the main asset, which also conveys information about the value of another asset, referred to as the substitute. A continuous flow of information allows uninformed traders to form expectations about the liquidation value of each asset. The authors find that insiders submit more market and limit orders than uninformed traders do, and that they are more attracted toward the high-volatility asset, which is the substitute. Moreover, insiders make more money with the substitute than with the main asset, and realize their biggest gains when insider trading is prohibited in the main asset. The results also suggest the use of manipulation strategies by insiders.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/15427560.2018.1406941 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:hbhfxx:v:19:y:2018:i:4:p:407-420

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/hbhf20

DOI: 10.1080/15427560.2018.1406941

Access Statistics for this article

Journal of Behavioral Finance is currently edited by Brian Bruce

More articles in Journal of Behavioral Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().