Okay, I agree that insider trading leads to bad incentives and I retract most of the footnote. Maybe the tone of my footnote is a bit too Pollyanna-ish and maybe so is the rest of the post.
I suppose also insider trading by companies themselves on their own stock avoids this, but increases transaction costs by fear of adverse selection, so perhaps it’s also bad.
Okay, I agree that insider trading leads to bad incentives and I retract most of the footnote. Maybe the tone of my footnote is a bit too Pollyanna-ish and maybe so is the rest of the post.
I suppose also insider trading by companies themselves on their own stock avoids this, but increases transaction costs by fear of adverse selection, so perhaps it’s also bad.