Insider Trading When The Market Deviates From Semi-strong Efficient Condition

In modern financial mathematics,the starting point for many well-known financial model is that all investors have the same information.But in real financial and securities market,the information asymmetry is widespread.The asymmetric information theory has been a hot topic of the cross-cutting area of information economics and financial mathematics.The theory have played a strong role in the guiding of many other research areas,and will have a wide application prospects.We study the impacts of shared information and price deviation from semi-strong efficient condition on traders' trading behavior in the context of Kyle(1985)'s speculative market.We find that when the price is lower than the semi-strong efficient price the insider and outsiders trade more aggressively on their private information,with a result that more information is incorporated into the price.Moreover,the inside and outsiders all prefer that the price is lower than the semi-strong efficient condition,while market makers prefer that the price is higher than the semi-efficient condition.