A game theory model of regulatory response to insider trading
We develop a model which can help in explaining the evolving regulatory regime around insider trading. We form a simple sequential game-theoretical model of insider trading transactions and, utilizing Monte Carlo simulation to determine equilibrium, we show that costly investigations and low penalti...
| Main Authors: | , |
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| Format: | Journal Article |
| Published: |
Routledge
2016
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| Online Access: | http://hdl.handle.net/20.500.11937/31859 |
| _version_ | 1848753501243441152 |
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| author | Smales, Lee Thul, M. |
| author_facet | Smales, Lee Thul, M. |
| author_sort | Smales, Lee |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | We develop a model which can help in explaining the evolving regulatory regime around insider trading. We form a simple sequential game-theoretical model of insider trading transactions and, utilizing Monte Carlo simulation to determine equilibrium, we show that costly investigations and low penalties incentivize traders to engage in illegal transactions. While the model helps to explain stiffer action by regulatory bodies, the question remains as to whether the elevated penalty levels are sufficient to prevent further insider trading. |
| first_indexed | 2025-11-14T08:25:31Z |
| format | Journal Article |
| id | curtin-20.500.11937-31859 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T08:25:31Z |
| publishDate | 2016 |
| publisher | Routledge |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-318592018-01-04T03:16:35Z A game theory model of regulatory response to insider trading Smales, Lee Thul, M. We develop a model which can help in explaining the evolving regulatory regime around insider trading. We form a simple sequential game-theoretical model of insider trading transactions and, utilizing Monte Carlo simulation to determine equilibrium, we show that costly investigations and low penalties incentivize traders to engage in illegal transactions. While the model helps to explain stiffer action by regulatory bodies, the question remains as to whether the elevated penalty levels are sufficient to prevent further insider trading. 2016 Journal Article http://hdl.handle.net/20.500.11937/31859 10.1080/13504851.2016.1200179 Routledge fulltext |
| spellingShingle | Smales, Lee Thul, M. A game theory model of regulatory response to insider trading |
| title | A game theory model of regulatory response to insider trading |
| title_full | A game theory model of regulatory response to insider trading |
| title_fullStr | A game theory model of regulatory response to insider trading |
| title_full_unstemmed | A game theory model of regulatory response to insider trading |
| title_short | A game theory model of regulatory response to insider trading |
| title_sort | game theory model of regulatory response to insider trading |
| url | http://hdl.handle.net/20.500.11937/31859 |