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Informed Trading and the "Leakage" of Information

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  • Goenka, Aditya

Abstract

This paper, in a Shapley-Shubik market game framework, examines the effect of "leakage" of information: private information becoming available to uninformed traders at a later date. We show that (a) If information acquisition by the informed traders is costless, this leads to faster revelation of information; (b) If information acquisition is costly, there may be no acquisition of information; (c) Information leakage leads to a fall in value of information and hence, increases the incentive for informed traders to sell the information.

Suggested Citation

  • Goenka, Aditya, 2000. "Informed Trading and the "Leakage" of Information," Economics Discussion Papers 8835, University of Essex, Department of Economics.
    • Handle: RePEc:esx:essedp:8835
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    2. Zhou, Deqing & Wang, Wenjie, 2020. "Insider, outsider and information heterogeneity," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).
    3. Dmitry Levando, 2012. "A Survey Of Strategic Market Games," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(194), pages 63-106, July - Se.
    4. Xingxing Cao & Jing Wang & Zhi Yang, 2025. "Analysis of the Behavior of Insider Traders Who Disclose Information to External Traders," IJFS, MDPI, vol. 13(2), pages 1-19, June.
    5. Eddy Cardinaels & Filip Roodhooft & Luk Warlop & Gustaaf Van Herck, 2008. "Competitive Pricing in Markets with Different Overhead Costs: Concealment or Leakage of Cost Information?," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 46(4), pages 761-784, September.
    6. Liu, Xia & Huang, Wenli & Liu, Bo & Zhang, Xiaohong, 2019. "Strategic leakage of private information," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 637-644.
    7. Dev, Pritha, 2013. "Transfer of information by an informed trader," Finance Research Letters, Elsevier, vol. 10(2), pages 58-71.
    8. Zhou, Deqing, 2016. "Public disclosure, information leakage, and strategic trading," Economics Letters, Elsevier, vol. 147(C), pages 46-50.
    9. Agliari, Anna & Naimzada, Ahmad & Pecora, Nicolò, 2018. "Boom-bust dynamics in a stock market participation model with heterogeneous traders," Journal of Economic Dynamics and Control, Elsevier, vol. 91(C), pages 458-468.
    10. Peck, James & Spear, Stephen E., 2003. "Introduction to a Festschrift for Karl Shell," Journal of Economic Theory, Elsevier, vol. 109(2), pages 153-155, April.
    11. Toraubally, Waseem A., 2019. "Arbitrage equilibria in large games with many commodities," Economics Letters, Elsevier, vol. 179(C), pages 24-28.
    12. Christopher F Baum & Mustafa Caglayan & Neslihan Ozkan, 2004. "The second moments matter: The response of bank lending behavior to macroeconomic uncertainty," Computing in Economics and Finance 2004 172, Society for Computational Economics.

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