Asymmetric Information,Heterogeneous Prior Beliefs and Market Regulation

• 作者: Hong LIU Ying JIANG Huai-nian ZHANG
• 来源期刊: 应用数学学报（英文版）
• 年，卷（期）: 2021,（3）
• 页码范围: 459-476
• 页数: 18页
• 语种: 英文

摘要

This paper studies the trading behavior of an irrational insider and its influence on the market equilibrium in the presence of market regulation.We find that the market with only one insider with private information is almost close to a strong efficient market,under the condition of market regulation.In the equilibrium,the probability of the insider being caught trading with private information is zero,which shows that the reasonable behavior of the regulator is to essentially give up regulation.But the market efficiency and the irrational trader's trading intensity all greatly improve because of the existence of the market regulation.