class actions, disabled rights, copyright, attorneys general, online speech, law schools, obesity, New York, mortgages, legal blogs, safety, CPSC, pharmaceuticals, patent trolls, ADA filing mills, international human rights, humor, hate speech, illegal drugs, immigration law, cellphones, international law, real estate, bar associations, Environmental Protection Agency, First Amendment, insurance fraud, slip and fall, smoking bans, emergency medicine, regulation and its reform, dramshop statutes, hotels, web accessibility, United Nations, Alien Tort Claims Act, lobbyists, pools, school discipline, Voting Rights Act, legal services programs
   
   
 
   

 

Market efficiency, incentives and regulation

March 4, 2006 9:48 AM

The NYT's Joe Nocera writes about "the anguish of being an analyst." The problem is that it's hard for analysts to get paid in an efficient market, where the value of information is dissipated as soon as it's used. This means, among other things, that analysts are more likely to get paid for buy recommendations than for sells. So what to do?

As discussed here, we should avoid regulation that reduces the few incentives that exist to produce valuable securities market information. Don't restrict use of nonpublic information in an elusive quest for "fairness." Get rid of Regulation FD. And if we're concerned that there's too little incentive to produce negative information, then we shouldn't attack the shorts.

 

 

 

Rafael Mangual
Project Manager,
Legal Policy
rmangual@manhattan-institute.org

Communications
Manhattan Institute
communications@manhattan-institute.org

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.