Informed Trading and the "Leakage" of Information

Aditya Goenka

Economics Discussion Papers from University of Essex, Department of Economics

Abstract: This paper, in a Shapley-Shubik market game framework, examines the effect of "leakage" of information: private information becoming available to uninformed traders at a later date. We show that (a) If information acquisition by the informed traders is costless, this leads to faster revelation of information; (b) If information acquisition is costly, there may be no acquisition of information; (c) Information leakage leads to a fall in value of information and hence, increases the incentive for informed traders to sell the information.

Keywords: Informed trading; insider trading; strategic market games; information revelation; arrival of information; market efficiency (search for similar items in EconPapers)
Date: 2000
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Journal Article: Informed trading and the 'leakage' of information (2003)
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