[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.