Insider Trading and Market Manipulations: A Weak Invisible Hand Result

Jean Rochet and Jean-Luc Vila

CEPR Financial Markets Paper from European Science Foundation Network in Financial Markets, c/o C.E.P.R, 33 Great Sutton Street, London EC1V 0DX.

Abstract: In this paper, we consider a Kyle type model of insider trading. We show that: i) there exists a unique equilibrium independently of the distribution of uncertainty; ii) this equilibrium minimizes the expected gains of the insider under incentive compatibility constraints. We extend our results to models of market manipulations and to a class of signalling games.

Keywords: Insider Trading; Market Manipulations; Signalling Games; Auction Market; Dealer Market (search for similar items in EconPapers)
Date: 1990-11
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