Optimal Use of Financial Information

DC Field Value Language
dc.contributor.authorShin, Jhinyoung-
dc.identifier.citationSeoul Journal of Economics 16 (No. 3 2003): 295-322en
dc.description.abstractThis paper investigates the conditions under which a possessor of valuable information on financial security may prefer to sell it directly or give it away free of charge i.e., donating it to other market participants instead of trading on it. A market participant will never find it optimal to sell or donate the information that s/he has monopolistic ownership of. Otherwise, sale or donation of information has an important commitment effect in that it credibly commits a risk neutral possessor of information to a strategy which promotes more intense competition among informed trader s in the market and makes the trading strategies of other informed trader s les s aggressive. It is this strategic externality that makes the selling or donation of information an optimal strategy. The model in this paper also shows that if the security price does not fully reflect the private in formation of all the traders, diluting the seller's information before selling it is not optimal even if the seller trades on her own account while selling her information.-
dc.publisherSeoul Journal of Economicsen
dc.subjectstrategic tradingen
dc.subjectInformation salesen
dc.subjectDonation of informationen
dc.subjectFinancial Informationen
dc.titleOptimal Use of Financial Informationen
dc.typeSNU Journalen
Appears in Collections:
College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.16(3) (Fall 2003)
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