Executive Takeaways
■ When market information is very costly, traders overestimate their ability to generate profit. ■ Self-focus leads traders to pay too much for information and risk too little to protect this advantage. ■ To hide their advantage, informed traders do not trade enough to recover the cost of information. ■ When information is less costly, many traders become informed, speeding dissemination.
Lucy F. Ackert, Professor of Finance
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