Insider Trading + Prediction Markets
Chris F. Masse July 7th, 2007
InTrade’s John Delaney interviewed by Freakonomics:
Q. How does Intrade deal with insider trading?
A. Insider trading is one of the wicked problems, perhaps. Intrade is about providing the best predictive information. If insiders have information, then getting that information reflected in the market increases the quality of the information. I know this is not the conventional view concerning insider trading, and I am not arguing wholesale adoption or acceptance of insider trading. But we all know that, in the real world, insiders trade on inside information. We have even had markets on insider trading. Our view is to get the best information available into the market while we make sure there is some fair protection for outsiders.
I will have a third blog post on this John Delaney interview, later on, where I will make some comments.
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The George Mason University School of Law hosted a symposium on insider trading in January 2007 (commemorating the 40th anniversary of Henry Manne’s seminal work on the topic). Among the presentations was a paper by Robin Hanson discussing “Insider Trading and Prediction Markets.”
Papers from the symposium are to appear this fall in an issue of the Journal of Law, Economics and Policy. The current version of Hanson’s paper is on his website at GMU.
Thanks, Mike.
For your information, I was going to excerpt many papers on Midas Oracle but haven’t gotten time to do so. I will do this this summer, here.
There are plenty of new papers that the Midas Oracle readers should be aware of.