[Loquebantur]

By your logic, insider trading would be just fine.

For a market to function properly, information pertinent to traded value has to flow freely. The more you stifle that, the more rigged the market. Essentially, you sustain a monopoly that way.

Of course, people in possession of such "insider information" believe themselves in the right to profit from it. But that perspective is obviously biased and reveals a fundamental conflict between public good and private ownership. From the public perspective, the market works best when monopolies are dissolved quickly.

[snapplebobapple]

Land is a tough one though because the information that person x is buying it to amalgamate the land for some purpose lets the remaining land holders abuse the market power of being the hold outs for further gain. The problem is the piecemeal nature of accumulating the land for a project means you have market power abuse issues on both sides and secrecy alleviates some of that from the buyer side.

[kasey_junk]

In the US (but not necessarily other jurisdictions), insider trading laws are not there to protect the broader market, but to protect other shareholders.

There is no assumption that you can’t trade on knowledge unavailable to the rest of the market just not information that should be available to other shareholders but isn’t.

It’s not about a working market it’s about preventing you from stealing from other people.

Lots of economists think insider trading should be legal, precisely because it would make the market more transparent, not less.

[Loquebantur]

Lots of economists are clearly wrong, as mutually excluding statements cannot be simultaneously true. To find out which side is which, you can employ simple logic.

If you sustain a profitable information imbalance, you prevent the market from reaching a more efficient state. You steal from everybody else that way. And incur opportunity costs that will dwarf any profits made. Not necessarily on a short-term personal level, certainly on a societal one in the long run.

People have surprising difficulties understanding, they are that society.

[SideQuark]

> Lots of economists are clearly wrong, as mutually excluding statements cannot be simultaneously true. To find out which side is which, you can employ simple logic

The world isn't black and white, and nearly zero things as complex as pros and cons of allowing insider trading can be reduced to naive boolean logic.

It is a fact for a long time a lot of economists, perhaps even a majority, are for insider trading because it provides signal to markets and pricing quicker than only allowing investors to discover problems on a quarterly clock-tick, which results in a lot more damage from asset floodgates instead of smoother transitions.

Ever read any published paper on the topic? Use Google scholar, you'll find useful knowledge there.

[tptacek]

The whole premise of price discovery is that participants in the market profit from information imbalances. The profit motive is the incentive for people to expend effort to generate and then, through price signals, disseminate information.

[imtringued]

No it isn't. In neoclassical economics there are no information imbalances. Everyone has access to perfect information and yet prices are formed and updated anyway.

[johngladtj]

Insider Trading is just fine.

[Loquebantur]

No, it's really not.

If it were, shell games would be great as well? One like the other is simply fraud. You exploit others' lack of insight.

Doing so is unethical due to the implications it would have on a societal level if it were condoned. In particular, you likely imagine yourself regularly ending up on the better end of the bargain. You are wildly mistaken.

[johngladtj]

Insider Trading is just fine because it allows the market to function.

If you don't want to participate in it you don't have to, but why should other suffer because of your moral hangups about other people making money?