Deqing Zhou

  1. Insider Trading in the Market with Rational Expected Price.

    Authors: Fuzhou Gong, Deqing Zhou
    Subjects: Trading and Market Microstructure
    Abstract

    Kyle (1985) builds a pioneering and influential model, in which an insider
    with long-lived private information submits an optimal order in each period
    given the market maker's pricing rule. An inconsistency exists to some extent
    in the sense that the ``constant pricing rule " actually assumes an adaptive
    expected price with pricing rule given before insider making the decision, and
    the ``market efficiency" condition, however, assumes a rational expected price
    and implies that the pricing rule can be influenced by insider's strategy.

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