Title :
The information feedback in stock market
Author_Institution :
Sch. of Econimics, Jiangsu Teachers Univ. of Technol., Changzhou, China
Abstract :
In this paper, Glosten/Milgrom(1985) Informational Model is adopted to analyze the market maker´s establishment of the bid-ask spread in the existence of asymmetric information in the stock market The bid-ask spread is established to avoid losses of the market maker traders when trading with the informed traders. The market makers learn the market information feedback by observing the types of orders and by using Bayes rule. However, the true value of a stock is eventually reflected in stock price along with the trading process. The analysis of the model can provide the necessary theoretical basis for the development and improvement of China´s market maker system.
Keywords :
Bayes methods; commerce; pricing; stock markets; Bayes rule; China market maker system; asymmetric information; bid-ask spread; information feedback; informational model; market maker trader; stock market; stock price; Educational institutions; bid-ask spread; information feedback; informational model; market maker;
Conference_Titel :
Future Information Technology and Management Engineering (FITME), 2010 International Conference on
Conference_Location :
Changzhou
Print_ISBN :
978-1-4244-9087-5
DOI :
10.1109/FITME.2010.5654863
