On insider trading and belief evolution
| Autor: | Werner Güth, René Levínský, Thomas Gehrig |
|---|---|
| Rok vydání: | 2013 |
| Předmět: |
Economics and Econometrics
education.field_of_study Strategic complements Financial economics Information sharing Population Commit General Business Management and Accounting Supply and demand Insider Microeconomics Competition (economics) Economics ComputingMilieux_COMPUTERSANDSOCIETY Insider trading education |
| Zdroj: | Journal of Evolutionary Economics. 23:767-781 |
| ISSN: | 1432-1386 0936-9937 |
| Popis: | In a market with stochastic demand with seller competition at most one seller can acquire costly information about demand. Other sellers entertain idiosyncratic beliefs about the market demand and the probability that an informed seller is trading in the market. These idiosyncratic beliefs co-evolve with the potential insider’s inclination to acquire information.True demand expectations (in the Bayesian sense) are not evolutionarily stable when beliefs, via revelation, can be used to commit to more aggressive behavior. The commitment effect fades away in large markets and has the same direction for both strategic substitutes and complements. Whether one observes an insider, in the long run, depends on information costs. For strategic substitutes insider activity benefits the whole population whereas the uninformed sellers could gain even more than the insider. |
| Databáze: | OpenAIRE |
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