The optimal strategies of competitive inside traders with the existence of public information

摘要

We studied the inside traders' optimal strategies and the impact of public information on competitive insider trading in the context of Holden and Subrahmanyan(1992)'s speculative market. We explicitly described the unique linear equilibrium and found that competition among inside traders leads to more informative equilibrium price. Public information is detrimental for insiders and beneficial for the liquidity traders. Every insider also put a negative weight on the public information in formulating his optimal strategy, but the weight is bigger than that of Shunlong Luo (2001), where there is only one insider.