[ikeboy]

The argument is that instead of having the government decide what's best, the company should decide (and it doesn't need to be during the IPO). Then, the so-called "free market" will decide whether it's good or bad. If they decide it's bad for companies, then companies won't allow it, because it will hurt their stock price. If they decide it's good, then companies will allow it.

[lambdapie]

Why is free market in scare quotes? And why "so-called"?

[ikeboy]

Because obviously the market won't be completely free: companies deciding on their policy in the proposed regime would most certainly be influenced by factors beyond the question of whether it's good for their stock price.

[lambdapie]

Ok that's reasonable. I agree that in theory this argument makes sense. In practice I think the arguments that insider trading is inefficient are compelling enough (see https://news.ycombinator.com/item?id=10487779) that it's not worth pursuing this course.

[ikeboy]

Inefficient compared to what? The choice is not between "publicize the info" and "let insiders trade", its between insider trading and no insider trading, and the information stays private.

[lambdapie]

Inefficient compared to what? The choice is not between "publicize the info" and "let insiders trade", its between insider trading and no insider trading, and the information stays private.

You are implying that I don't realize that insider trading reveals extra information. But I have clearly stated in almost every post that insider trading would reveal additional information. There's no point continuing this discussion if I am responding to what you say but you're ignoring what I say. I'd ask you to keep an open mind and not assume that other people just need to be enlightened via terse replies.

[ikeboy]

You wrote

>So (and again, a model is really needed to confirm this) public information is cheaper in terms of its impact on liquidity, than insider information. One thing I'm not certain of is whether many insiders competing to trade on the same information would be as good as public information

That sounded to me like you were against insider trading because it wasn't as efficient as public information. I don't get why that implies we shouldn't allow insider trading.

Your other post said that it necessarily harms someone, but I think that argument was successfully argued against in the link I posted above. Do you have a problem with that part of it?

Also, I would still like it being up to the company. If liquidity is important to them, and the experiment shows that allowing it leads to less liquidity, then eventually they'll stop it.

I don't think that market is inefficient enough to necessitate government action.