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ABSTRACT We model the strategic interaction between the large investor and follower to explore the rationale of following behaviour and predatory trading. It is shown that the large investor behaves… Click to show full abstract
ABSTRACT We model the strategic interaction between the large investor and follower to explore the rationale of following behaviour and predatory trading. It is shown that the large investor behaves like a predator, and can prey on the follower with superior information. In addition, our study concludes that market liquidity and the informativeness of prices both increase with the precision of follower’s order signal.
Keywords:
following behaviour;
behaviour predatory;
predatory trading
Journal Title: Applied Economics Letters
Year Published: 2020
Link to full text (if available)
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Journal Title: Applied Economics Letters
Year Published: 2020
Link to full text (if available)
Share on Social Media: Sign Up to like & get
recommendations!