Open AccessOptimal Insider Strategy with Law Penalties
Author(s) -
José Fajardo
Publication year - 2016
Publication title -
revista brasileira de economia
Language(s) - English
Resource type - Journals
eISSN - 1806-9134
pISSN - 0034-7140
DOI - 10.5935/0034-7140.20160002
Subject(s) - insider , insider trading , order (exchange) , function (biology) , subject (documents) , economics , mathematical optimization , law and economics , law , computer science , mathematics , finance , political science , evolutionary biology , library science , biology
We study the optimal continuous trading strategy of an insider who is subject to the possibility of law penalties due to her illegal trading activity. Also, we discuss how to obtain the optimal penalty rule in order to maximize a welfare function