Bulls Trading Game Model With Insider Trading

During trading in financial assets, some traders trade with advantages they grasp in value of asset information (especially private information), which is called insider trading. Since Kyle proposed insider trading model, many domestic and foreign experts have paid attention to this question and achieved a lot. Now, insider trading is a hot topic in financial asset trading market.By studying the results analyzing insider trading behavior achieved by domestic and foreign experts, following questions were investigated in this paper.First, background and significance of insider trading research were stated and references of insider trading were summarized in the paper.Second, concepts, theoretical basis and classical models about insider trading were described and analyzed.Third, as participants in financial assets trading market master different amount of information, using Nash equilibrium theory, affine theory and theory of stochastic analysis, new equilibrium models of single-term and multi-term trading market with insider trading were built and investigated. The linear equilibrium solution of single-term and two-term trading model were achieved.Forth, for the linear equilibrium market of single-term trading, market depth, equilibrium price information and balanced traders income were analyzed. The results show:when public information or local shared information is released more positively, the external and noise traders will get more advantages but it will be harder for insider traders to manipulate trading market. So public information is very critical for the market to keep stable and develop.Last, the main content of this paper was summarized and views on the future work were stated.