Insider behavior under different market structures: experimental evidence on trading patterns, manipulation, and profitability

  • Philipp Hornung
  • Ulrike Leopold-Wildburger
  • Roland Mestel
  • Stefan Palan
Original Paper


We conduct laboratory experiments incorporating different market structures and insiders who compete with imperfectly informed traders. The insiders possess perfect information regarding the fundamental value of the tradable asset, whereas the imperfectly informed participants receive a noisy signal of fundamental value. In addition to the two trader types, we vary the market design by using either a stand-alone continuous double auction market or a continuous double auction market preceded by either a transparent or a nontransparent opening call auction. The results provide insights into whether and how insiders try to stay undetected, how their profits are accumulated and what market structures are advantageous for insiders.


Insider trading Call auction Continuous double auction Transparency 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  • Philipp Hornung
    • 1
  • Ulrike Leopold-Wildburger
    • 1
  • Roland Mestel
    • 2
    • 3
  • Stefan Palan
    • 4
    • 5
  1. 1.Institute of Statistics and Operations ResearchKarl-Franzens-University GrazGrazAustria
  2. 2.Institute of Banking and FinanceKarl-Franzens-University GrazGrazAustria
  3. 3.Institute of Banking and InsuranceUniversity of Applied Sciences JoanneumGrazAustria
  4. 4.Institute of Banking and FinanceKarl-Franzens-University GrazGrazAustria
  5. 5.Department of Banking and FinanceUniversity of InnsbruckInnsbruckAustria

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