Insiders-Outsiders, Transparency, and the Value of the Ticker

40 Pages Posted: 8 Apr 2008 Last revised: 15 Mar 2013

See all articles by Giovanni Cespa

Giovanni Cespa

Bayes Business School; Bayes Business School; Centre for Economic Policy Research (CEPR)

Thierry Foucault

HEC Paris - Finance Department

Multiple version iconThere are 2 versions of this paper

Date Written: June 13, 2008


We consider a multi-period rational expectations model in which risk-averse investors differ in their information on past transaction prices (the ticker). Some investors (insiders) observe prices in real-time whereas other investors (outsiders) observe prices with a delay. Hence, the level of transparency is higher when more investors are insiders. A higher level of transparency always promotes informational efficiency but full transparency is never socially optimal. Rather, the Pareto optimal market structure is either fully opaque or has limited transparency (that is, both insiders and outsiders coexist in the market). We also show how the socially optimal level of transparency can be reached by charging a fee for price information. This fee acts as a Pigovian tax and is set high enough to curb excessive acquisition of ticker information.

Keywords: Market Data Sales, Latency, Transparency, Price Discovery, Hirshleifer effect

JEL Classification: G10, G12, G14

Suggested Citation

Cespa, Giovanni and Cespa, Giovanni and Foucault, Thierry, Insiders-Outsiders, Transparency, and the Value of the Ticker (June 13, 2008). Available at SSRN: or

Giovanni Cespa (Contact Author)

Bayes Business School ( email )

United Kingdom

Bayes Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44(0)2040708704 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

Thierry Foucault

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
(33)139679569 (Phone)
(33)139677085 (Fax)


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