Strategic Information Acquisition in Capital Markets* |
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Authors: | Andreas Szczutkowski |
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Institution: | Technische Universitat Chemnitz, Germany |
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Abstract: | A simple model of an asset market is presented, where agents are asymmetrically informed and hence information is transmitted through the price system. Prior to the trading period, a group of traders is given the opportunity to decide in a collusive arrangement whether they want to undertake a (costless) analysis which yields information about the future dividends of a risky asset. It will be shown that the fully rational and risk-averse insiders can do better without the information, if the dividend volatility of the risky asset is sufficiently low. JEL Classification Numbers: D82, G14. |
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