We present a model in which a policymaker observes trade in a financial asset before deciding whether to intervene in the economy, for example by offering a bailout or monetary stimulus. Because an intervention erodes the value of private information, informed investors are reluctant to take...

Consider a market where an informed monopolist sets the price for a good or asset with a value unknown to potential buyers. Upon observing the price, buyers may pay some cost for information about the value before deciding on purchases. To restrict buyer beliefs we generalize the idea of the...

We model the stock market as a timing game, in which arbitrageurs who are not expected to be certainly rational compete over profit by bursting the bubble caused by investors' euphoria. The manager raises money by issuing shares and the arbitrageurs use leverage. If leverage is weakly regulated,...

Collusion and soft budget constraint are two conspicuous phenomena in transition economies¡¯ banking system. Literature has separately investigated those two phenomena from theoretical point of views. However, the cross-point of both phenomena has been neglected in the research of banking...

We analyze a strategic trading model where an overconfident insider is required to publicly disclose his trades after the fact. We find the more confident insider is more concerned about the effect the initial trading has on the future.

This paper demonstrates the theoretical foundation that underlies the willingness of rational arbitrageurs to delay and reinforce the speculative attack. The key assumptions are that there is a small probability that arbitrageurs are behavioral and never time the market of their own accord and...

We analyze a dynamic framework where an informed agent overestimates or underestimates the precision of his noisy private signal. We investigate the effect of the insider's belief on equilibrium results such as the price informativeness, the liquidity cost, the trading strategy and the expected...

This paper analyzes the market manipulation in the Treasury auction market. There exist manipulation strategies for informed manipulation in both discriminatory auction (DA) and uniform price auction (UPA) in equilibrium. The manipulation extent is positively correlated with the potential...

Based on Allen and Gale (1992), Aggarwal and Wu (2002), this article introduces dynamic transaction costs. So, we can comprehensively and theoretically discuss the major roles of government against stock market manipulation for the first time. First, the government should require all the related...

Collusion and soft budget constraint are two conspicuous phenomena in transition economies' banking system. Literature has separately investigated those two phenomena from theoretical point of views. However, the cross-point of both phenomena has been neglected in the research of banking...