3 ms·

It is a shared good that benefits all participants for a market to be efficient. Insider trading reduces market efficiency.

• siftrics 4y ago
  It literally does the opposite. It pushes the price in the direction it's going to go when the information is made public.
  • munificent 4y ago
    You're only thinking of the first-order effect. If insider trading is allowed then, yes, those who have access to inside information can trade on it more efficiently. But it also highly incentivizes market participants to hide information. In a world where insider trading is allowed, anyone who has access to inside information can now personally monetize it as long as that information does not get out to the wider market. You're basically paying people to manufacture information asymmetry. As an emergent effect, that does not lead to the widely available information needed for a market to perform efficiently.
    • siftrics 4y ago
      How will they profit if the information never becomes public?
      • munificent 4y ago
        ...by insider trading on it.
        • siftrics 4y ago
          Why would the price move in their favor if the information never becomes public?