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Prices are a function of number of market participants and information of each participant. If insider trading is legal, fewer people will participate in the ma
by mlazos 5y ago
Prices are a function of number of market participants and information of each participant. If insider trading is legal, fewer people will participate in the market because they will lose out due to information asymmetry and this will lead to pricing inefficiencies. What’s interesting is that what others are willing to pay is key public information as well.
- economist9374 5y ago> If insider trading is legal, fewer people will participate in the market because they will lose out due to information asymmetry and this will lead to pricing inefficiencies. This only makes sense in a world where regulators can effectively prevent insider trading, that’s not the world we live in though.
- viraptor 5y agoDoes it really? We have a lot of laws and activities where we know there not perfect, yet we set the right incentives. Having laws against murder does not effectively prevent most of murder from happening.
- economist5932 5y ago