Comment by kibwen
1 day ago
The market can only resolve based on public information, so it could only incentivize revealing information that is already destined to be imminently revealed. Furthermore, it doesn't incentivize sharing that information with enough lead time to actually take action based on that information; the opposite is actually true, insiders are incentivized to wait until just before the event to make their trade, meaning that the public gets no actionable information in practice. And that's assuming that you can distinguish an insider from someone lying for the sake of market manipulation.
Untrue. Insiders are incentivized to trade when they can buy at the lowest price. That could be at any point up to the event.
> [...] insiders are incentivized to wait until just before the event to make their trade, [...]
What are you basing that one? And how is this supposed to work?
If you are an insider the incentive is to trade as soon as possible, lest some other insider beats you to the punch, or some conventional leak (or investigative journalist) spoils your party.
This is easiest to see, when there are multiple unconnected insiders: the first to trade wins. But even if you merely suspect another insider might exist, you have an incentive to trade first.
> And that's assuming that you can distinguish an insider from someone lying for the sake of market manipulation.
That's exactly the same as any other noise trader in financial markets, yes. Nothing specific about insider information.