Ssing Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility
نویسندگان
چکیده
We show how an insider, a financial journalist, or a "guru" can repeatedly manipulate an asset market to his own benefit, by making strategically distorted announencements or predictions. We also analyze the extent to which the public's attempt to learn over time whether or not this informed agent can be trusted may limit, in the long run, his influence on the market. In solving the model, we extend Sobel's [1985] results for repeated games of information transmission to the case where the sender has imperfect information, which generates richer and more realistic reputation processes over an infinite horizon.
منابع مشابه
Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility*
Access to private information is shown to generate both the incentives and the ability to manipulate asset markets through strategically distorted announcements. The fact that privileged information is noisy interferes with the public's attempts to learn whether such announcements are honest; it allows opportunistic individuals to manipulate prices repeatedly, without ever being fully found out...
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