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On the impossibility of insider trade in rational expectations equilibria

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  • Alexander Zimper

Abstract

Existing no trade results are based on the common prior assumption (CPA). This paper identifies a strictly weaker condition than the CPA under which speculative trade is impossible in a rational expectations equilibrium (REE). As our main finding, we demonstrate the impossibility of speculative asset trade in an REE whenever an insider is involved who […]

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  • Alexander Zimper, 2013. "On the impossibility of insider trade in rational expectations equilibria," Working Papers 399, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:399
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    More about this item

    Keywords

    capital market; economic theory; investment;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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