option pricing with an illiquid underlying asset market abstract we examine how price impact in the underlying asset market affects the replication of a european contingent claim we obtain a generalized black scholes pricing pde and establish the existence and uniqueness of a classical solution to this pde unlike the case with transaction costs we prove that replication with price impact is always cheaper than superreplication compared to the black scholes case a trader generally buys more stock and borrows more shorts and lends more to replicate a call put furthermore price impact implies endogenous stochastic volatility and an out of money option has lower implied volatility than an in the money option this finding has important implications for empirical analysis on volatility smile

analysts gaap earnings forecasts and their implications for accounting research abstract we use newly available gaap forecasts to document that traditionally identified gaap forecast errors contain 37 measurement error correcting for this measurement error we settle a long standing debate regarding investor preference for gaap versus non gaap earnings and provide strong evidence of a preference for non gaap earnings we also revisit the use of non gaap exclusions to meet analysts forecasts when gaap earnings fall short results indicate that 34 of these traditionally identified meet or beat firms are misidentified due to measurement error and this error masks evidence that firms more frequently exclude transitory rather than recurring expenses for meet or beat purposes

are price limits really bad for equity markets despite widely documented criticisms price limit rules are present in many equity markets around the world using a game theoretic model we argue that if the cost of monitoring a market is high price limit rules are beneficial empirical tests based on a cross section of 43 equity markets across five continents support our theoretical prediction we find that the probability of the existence of price limit rules is greater in markets that incur higher monitoring costs due to poorer business disclosure more corruption and less efficiency in legal regulatory and technological environments

a discussion of assessing the relative informativeness and permanence of pro forma earnings and gaap operating earnings abstract by analyzing a carefully constructed earnings announcements sample that discloses a pro forma earnings number bhattacharya et al j account econom 36 1 3 2003 contribute to recent research documenting increasing differences between earnings as defined by generally accepted accounting principles gaap and alternative earnings definitions followed by capital markets the paper provides interesting descriptive data on pro forma earnings per share relative to both gaap earnings per share and actual earnings per share as tracked by i b e s also the authors conduct tests of the relative informativeness and persistence of these three earnings measures econometric and data limitations inhibit the inferences that can be drawn from some of these tests

minimum wage restrictions and employee effort in incomplete labor markets an experimental investigation abstract a minimum wage raises average wages along with modest increases in employees average effort levels generating a pareto improvement in social welfare the minimum wage reduces effort in the neighborhood of the minimum but has no systematic effect on effort levels at higher wages as a consequence average effort increases modestly with a minimum wage as it raises average wages similar results are reported within groups both when introducing and eliminating a minimum wage although the within group effects of introducing a minimum wage are stronger than dropping it

price manipulation in an experimental asset market we analyze in the laboratory whether an uninformed trader is able to manipulate the price of a financial asset by comparing the results of two experimental treatments in the benchmark treatment 12 subjects trade a common value asset that takes either a high or a low value only three subjects know the actual value of the asset while the market is open for trading the manipulation treatment is identical to the benchmark treatment apart from the fact that we introduce a computer program as an additional uninformed trader this robot buys a fixed number of shares in the beginning of a trading period and sells them again afterwards our main result shows that the last contract price is significantly higher in the manipulation treatment if the asset takes a low value and that private information is very well disseminated by both markets if the value of the asset is high finally even though this simple manipulation program loses money on average it is profitable in some instances

happy birthday you re fired the effects of an age dependent minimum wage on youth employment flows in the netherlands the dutch minimum wage for workers aged 15 to 23 is defined as a stepwise increasing function of a worker s calendar age using dutch administrative records the author shows that the birthday disc

minimum wages and the gender wage gap estimates are made of the effect of minimum wages on the size and composition of the gender wage gap in canada in 1986 it is found that minimum wages close the wage gap substantially for young workers and less so for adults the reduction in the gap is most attributable to the adverse employment effects of minimum wages the results also indicate that most of the reduction in the gap is realized through a fall in the discriminatory component

does short selling amplify price declines or align stocks with their fundamental values critics of short selling argue that short sellers amplify price declines by targeting firms with falling prices in an unwarranted manner contrary to this viewpoint we find that increases in short interest for firms following a price decline are associated with measures of overpricing based on financial statement analysis our results extend to short selling activity following marketwide declines we also find evidence consistent with the profitability of short selling following price declines being driven by valuation based positions overall our findings suggest short sellers primarily undertake valuation based strategies following price declines and have implications for regulators limiting short selling following price declines is likely to impede efficient price discovery this paper was accepted by mary barth accounting

microstructure bluffing with nested information chakraborty and yilmaz 2004a b con sider strategic models of repeated trading by an informed insider with long lived private infor mation they show that if market makers face uncertainty about the existence of informed trades in the order flow then with sufficiently many periods of trading the insider will bluff in every equilibrium in the precise sense ruled out in albert s kyle 1985 1323 i e by first destabilizing prices with unprofitable trades made at the nth auction then recouping the losses and much more with profitable trades at future auctions by bluffing the insider adds noise to the market s inference problem and makes prices less sensitive to his trades in this note we demonstrate how the scope for profitable bluffing is enhanced by the pres ence of other rational informed traders in the

a unique t 1 trading rule in china theory and evidence abstract unique to the world china adopts a t 1 trading rule which prevents investors from selling stocks bought on the same day we develop a dynamic price manipulation model to study the effects of the t 1 trading rule compared to the t 0 trading rule which allows investors to buy and sell the same stocks during the same day we show that the t 1 trading rule reduces the total trading volume and price volatility and improves the trend chasers welfare when trend chasing is strong an empirical test using data on china s b share stock market supports the model s theoretical predictions

an introduction to the wage curve en conomists and policymakers are interested in understanding the forces that determine the level of unemployment and the level of wages this paper describes an empirical discovery made with the help of international microeconometric evidence covering more than a dozen nations about a link between these two variables the connection can be portrayed on a graph with the level of unemployment on the horizontal axis and the level of wages on the vertical axis then the wage curve as shown in figure 1 is a downwardsloping locus this relationship tells us that holding others things constant if a region has a rise in unemployment in a particular year those who live there will have a fall in their wages in that year what does this curve mean how in a field where fully controlled experiments are almost impossible could there be any convincing scientific basis for this wage curve what is the relationship between the wage curve and a phillips curve other than that the curve of figure 1 looks like a phillips curve with the vertical axis mislabeled how does the wage curve fit into existing economic knowledge and is the empirical finding consistent with competitive theory this paper sketches answers to these kinds of questions the discussion draws on our book the wage curve blanchflower and oswald 1994 where the points raised here are investigated more fully it also rests upon work done by other economists whose work is listed in the paper and the bibliography

market manipulation price bubbles and a model of the u s treasury securities auction market this paper models the u s treasury securities auction market and demonstrates that mar ket manipulation can occur in a rational equilibrium it is a dynamic model with traders participating in a when issued market a treasury auction and a resale market manipu lations occur when dealers in the when issued market use their knowledge of the net order flow in order to corner the auction and squeeze the shorts from the when issued market this manipulation equilibrium generates bubbles in treasury security prices and specials in repo rates we also compare discriminatory and uniform price auction rules with respect to manipulation our analysis shows that manipulations can occur in long run equilibrium under discriminatory price auctions but not under uniform price auctions

risk aversion liquidity and endogenous short horizons we analyze a competitive model in which different information signals get reflected in value at different points in time if investors are sufficiently risk averse we obtain an equilibrium in which all investors focus exclusively on the short term in addition we show that increasing the variance of informationless trading increases market depth but causes a greater proportion of investors to focus on the short term signal which decreases the informativeness of prices about the long run finally we also explore parameter spaces under which long term informed agents wish to voluntarily disclose their information article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the effect of the tipped minimum wage on employees in the u s restaurant industry according to federal law in 2013 employers can take a credit of up to 5 12 for tips received by workers in satisfying the minimum wage requirement of 7 25 this article uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment hours and earnings in the u s restaurant industry using data from the quarterly census of employment and wages and the current population survey we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full service restaurant industry and for tipped workers the results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests

information disclosure and price manipulation during the pre closing session evidence from an order driven market on 20 february 2012 the taiwan stock exchange corporation launched an order matching simulation mechanism for five minutes during the start of the pre closing session in order to increase information disclosure during this period 13 25 13 30 pre closing information disclosure significantly reduces both trading costs and closing price volatility as well as price manipulation the decrease in price manipulation found in this work is due to pre closing information disclosure not the behaviour of investors shifting to an earlier time further if a stock price rises or falls by more than 3 5 in the simulation in the last minute during the closing session trading of the stock will be suspended for two minutes from 13 31 to reduce volatility however this trading mechanism suspended closing does not seem to have achieved the intended goals of the authorities as it has not been able to significantly reduce closing price volatility and price manipulation

the impact of fraudulent false information on equity values there are two types of stock price manipulation examined in the theoretical literature 1 insider trading which involves private information that is true and 2 the public spreading of fraudulent false information while there is a large empirical literature on insider trading this is the first empirical article to examine the impact of false fraudulent public information on stock prices and trading volume we find that such false information even after being denied by a credible source such as the sec generates both abnormal returns and abnormal trading volume we also find that the effects of the false information on security returns and volume can be persistent for at least 2 weeks in addition we show that perpetrators of false news attacks can make potentially large profits from such market manipulations

outcome manipulation in corporate prediction markets this paper presents a framework for applying prediction markets to corporate decision making the analysis is motivated by the recent surge of interest in markets as information aggregation devices and their potential use within firms we characterize the amount of outcome manipulation that results in equilibrium and the impact of this manipulation on market prices jel d71 d82 d83 d84

the information content of losses abstract this study hypothesizes that because shareholders have a liquidation option losses are not expected to perpetuate they are thus less informative than profits about the firm s future prospects the results are consistent with the hypothesis they also show that the documented increase in the earnings response coefficent as the cumulation period increases appears to be due exclusively to the effect of losses the liquidation option effect extends to profitable cases where earnings are low enough to make the option attractive alternating explanations for the low informativeness of losses such as mean reversal of earnings are not supported by the tests

monopsony power in the market for nurses estimates are presented of the inverse elasticity of supply of nursing services to the individual hospital a quantity which is a natural measure of employer market power the estimates corresponding to employment changes taking place over one year are quite high in the neighborhood of 0 79 and even for changes taking place over three years are substantial in the neighborhood of 0 26 the estimates do not significantly differ for hospitals in major metropolitan areas and do not depend very sensitively on the assumed form of the oligopsony equilibrium this abstract was borrowed from another version of this item

minimum wage effects throughout the wage distribution this paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage including wages hours employment and ultimately labor income not surprisingly the evidence indicates that low wage workers are most strongly affected while higher wage workers are little affected workers who initially earn near the minimum wage experience wage gains nevertheless their hours and employment decline and the combined effect of these changes on earned income suggests adverse consequences on net for low wage workers

does insider trading raise market volatility this paper studies the role of insider trading in explaining cross country differences in stock market volatility it introduces a new measure of insider trading the central finding is that countries with more prevalent insider trading have more volatile stock markets even after one controls for liquidity maturity of the market and the volatility of the underlying fundamentals volatility of real output and of monetary and fiscal policies moreover the effect of insider trading is quantitatively significant when compared with the effect of economic fundamentals

manipulation in the vix at the settlement time of the vix volatility index volume spikes on sp editorial decision june 19 2017 by editor robin greenwood

manipulating market sentiment we analyze a simple model of an asset market in which a large rational trader interacts with noise speculators who seek short run speculative gains and become active following a prolonged episode of mispricing relative to the asset s fundamental value the model gives rise to price patterns such as bubble dynamics positive short run correlation and vanishing long run correlation of price deviations from the fundamental value we argue that this example model sheds light on the question as to whether rational speculators abet or curb price fluctuations

equilibrium pricing and trading volume under preference uncertainty information collection processing and dissemination financial institutions is challenging this can delay the observation by traders of the exact capital charges and constraints of their institution during this delay traders face preference uncertainty in this context we study optimal trading strategies and equilibrium prices in a continuous centralized market we focus on liquidity shocks during which preference uncertainty is likely to matter most preference uncertainty generates allocative ineficiency but need not reduce prices traders progressively learning about the preferences of their institution conduct round trip trades which generate excess volume relative to the frictionless market in a cross section of liquidity shocks the initial price drop is positively correlated with total trading volume across traders the number of round trips is negatively correlated with trading profits and average inventory

is comprehensive income superior to net income as a measure of firm performance abstract with the exception of financial firms we find no evidence that comprehensive income is more strongly associated with returns market value or better predicts future cash flows income than net income moreover the only component of comprehensive income that improves the association between income and returns is the marketable securities adjustment our results do not support the claim that comprehensive income is a better measure of firm performance than net income our results also raise questions about the appropriateness of items included in sfas 130 comprehensive income as well as the need for mandating uniform comprehensive income disclosures for all industries

gaap versus the street an empirical assessment of two alternative definitions of earnings managers security analysts investors and the press rely increasingly on modified definitions of gaap net income known by such names as operating and pro forma earnings we document this phenomenon and discuss competing explanations for the recent rise in the use of such modified earnings numbers and implications for the interpretation of related accounting research our results show that over the past 20 years there has been a dramatic increase in the frequency and magnitude of cases where gaap and street earnings differ further there is a very strong bias toward the reporting of a street earnings number that exceeds the gaap earnings number we also show that the market response to the street earnings number has displaced gaap earnings as a primary determinant of stock prices finally through an analysis of earnings releases we show that management has taken a proactive role in defining and emphasizing the street number when communicating to analysts and investors

information aggregation and manipulation in an experimental market prediction markets are increasingly being considered as methods for gathering summarizing and aggregating diffuse information by governments and businesses alike critics worry that these markets are susceptible to price manipulation by agents who wish to distort decision making we study the effect of manipulators on an experimental market we find that manipulators are unable to distort price accuracy subjects without manipulation incentives compensate for the bias in offers from manipulators by setting a different threshold at which they are willing to accept trades

product market evidence on the employment effects of the minimum wage we infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry whereas perfect competition implies that employment falls and prices rise after a minimum wage increase the monopsony model potentially implies the opposite we show that estimated price responses are consistent with the competitive model we place fairly tight bounds on the employment response with the most plausible parameter values suggesting that a 10 increase in the minimum wage lowers low skill employment by 2 4 and total restaurant employment by 1 3

the effect of the minimum wage on the fast food industry using a longitudinal survey of fast food restaurants in texas the authors examine the impact of recent increases in the federal minimum wage on a low wage labor market less than 5 of fast food restaurants were using the new youth subminimum wage in july august 1991 even though the vast majority paid a starting wage below the new hourly minimum wage immediately before it became effective although some restaurants increased wages beyond the level needed to comply with higher minimum wages in both 1990 and 1991 those federal minimum wage increases greatly compressed the distribution of starting wages in the texas fast food industry two findings at variance with conventional predictions are that 1 employment increased more in those firms likely to have been most affected by the 1991 minimum wage increase than in other firms and 2 price changes were unrelated to mandated wage changes

anticipatory traders and trading speed we examine whether speed is an important characteristic of traders who anticipate local price trends these anticipatory participants correctly trade prior to the overall market and systematically act before other participants they use manual and algorithmic order entry methods but most are not fast enough to be high frequency traders hfts those anticipating price trends have impacts as if they are informed traders while the case for anticipatory participants affecting the volume of other traders is rejected a follow up sample shows significant attrition in accounts and difficulty maintaining the anticipatory strategies to identify anticipatory traders we devise novel methods to isolate local price trends using order book data from the west texas intermediate wti crude oil futures market

minimum wage increase and firm productivity evidence from the restaurant industry abstract the purpose of this paper is to examine the effects of increasing the federal minimum wage on productivity in the restaurant industry based on the equity theory and fair wage hypothesis this study empirically investigated the relationship between the federal minimum wage and restaurant productivity the results revealed that increasing the federal minimum wage immediately enhances restaurant productivity for up to two years the results further indicated that both full service restaurants and low wage restaurants benefit from the positive effect while there is no significant effect on limited service restaurants and high wage restaurants the results suggest that restaurants should cope with minimum wage policies by focusing on implementing initiatives that can maximize enhanced work efforts and productivity more importantly the results further highlight that restaurants should consider either continuously raising wage levels or raising them every two years to consistently obtain enhanced motivation and productivity

biased forecasts or biased earnings the role of reported earnings in explaining apparent bias and over underreaction in analysts earnings forecasts the extensive literature that investigates whether analysts earnings forecasts are biased and or inefficient has produced conflicting evidence and no definitive answers to either question this paper shows how two relatively small but statistically influential asymmetries in the tail and the middle of distributions of analysts forecast errors can exaggerate or obscure evidence consistent with analyst bias and inefficiency leading to inconsistent inferences we identify an empirical link between firms recognition of unexpected accruals and the presence of the two asymmetries in distributions of forecast errors that suggests that firm reporting choices play an important role in determining analysts forecast errors r 2003 elsevier b v all rights reserved

stock price manipulation it is generally agreed that speculators can make profits from insider trading or from the release of false information both forms of stock price manipulation have now been made illegal in this article the authors ask whether it is possible to make profits from a different kind of manipulation in which an uninformed speculator simply buys and sells shares they show that in a rational expectations framework where all agents maximize expected utility it is possible for an uninformed manipulator to make a profit provided investors attach a positive probability to the manipulator being an informed trader article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the effect of minimum wages on immigrants employment and earnings this study examines how minimum wage laws affect the employment and earnings of low skilled immigrants and natives in the u s minimum wage increases might have larger effects among low skilled immigrants than among natives because on average immigrants earn less than natives due to lower levels of education limited english skills and less social capital results based on data from the current population survey for the years 1994 2005 do not indicate that minimum wages have adverse employment effects among adult immigrants or natives who did not complete high school however low skilled immigrants may have been discouraged from settling in states that set wage floors substantially above the federal minimum jel classifications j23 j38 j15

do minimum wages affect non wage job attributes evidence on fringe benefits although many studies have tested neoclassical labor market theory s prediction that employers will react to binding minimum wages by reducing employment levels much less empirical research has explored the possibility that employers also respond to minimum wages by adjusting non wage components of the job such as fringe benefits job safety and access to training using current population survey data for 1979 2000 this study investigates the effect of minimum wage legislation on the provision of employer health insurance and employer pension coverage the authors examine effects of state and federal variation in minimum wages on groups likely to be affected by the minimum wage and compare these effects to estimates found for groups unlikely to be affected whether the analysis uses only state level variation or federal and state variation in minimum wages the results indicate no discernible effect of the minimum wage on fringe benefit generosity for low skill workers

a battle of informed traders and the market game foundations for rational expectations equilibrium abstract potential manipulation of prices and convergence to rational expectations equilibrium is studied in a game without noise traders informed players with initially long and short positions bulls and bears seek to manipulate consumer expectations in opposite directions in equilibrium period 1 prices reveal the state so manipulation is unsuccessful bears and uninformed consumers sell up to their short sale limits in period 1 bulls buy in period 1 but receive arbitrage losses when the number of bulls and bears approaches infinity the equilibrium converges to the ree without short sale constraints there is a non revealing equilibrium but no revealing equilibrium

high frequency trading and end of day price dislocation abstract we show that the presence of high frequency trading hft has significantly mitigated the frequency and severity of end of day price dislocation the effect of hft is more pronounced on days when end of day price dislocation is more likely to be the result of market manipulation moreover the effect of hft is more pronounced than the role of trading rules surveillance enforcement and legal conditions in curtailing the frequency and severity of end of day price dislocation we show our findings are robust to different proxies of the start of hft by trade size cancellation of orders and co location

ownership agency and wages an examination of franchising in the fast food industry this paper estimates the difference in compensation between company owned and franchisee owned fast food restaurants the contrast is of interest because contractual arrangements give managers of company owned outlets less of an incentive to monitor and supervise employees estimates based on two data sets suggest that employee compensation is slightly greater at company owned outlets than at franchisee owned outlets the earnings gap is 9 percent for assistant and shift managers and 2 percent for full time crew workers furthermore the tenure earnings profile is steeper at company owned restaurants these findings suggest that monitoring difficulties influence the timing and generosity of compensation

manipulation and the allocational role of prices it is commonly believed that prices in secondary financial markets play an important allocational role because they contain information that facilitates the efficient allocation of resources this paper identifies a limitation inherent in this role of prices it shows that the presence of a feedback effect from the financial market to the real value of a firm creates an incentive for an uninformed trader to sell the firm s stock when this happens the informativeness of the stock price decreases and the beneficial allocational role of the financial market weakens the trader profits from this trading strategy partly because his trading distorts the firm s investment we therefore refer to this strategy as manipulation we show that trading without information is profitable only with sell orders driving a wedge between the allocational implications of buyer and seller initiated speculation and providing justification for restrictions on short sales

non fundamental speculation we study an intertemporal asset market where insiders coexist with non fundamental speculators non fundamental speculators possess no private information on fundamental values of assets but have superior knowledge about some aspect of the market environment we show that the entry of these rational speculators can lead to reductions in market liquidity and in the information content of prices even in an efficient market also equilibrium trades display patterns of empirical interest for example speculators appear to chase trends and lose money after market overreactions while insiders trade as contrarians and profit after such overreactions

corporate prediction markets evidence from google ford and firm x despite the popularity of prediction markets among economists businesses and policymakers have been slow to adopt them in decision making most studies of prediction markets outside the lab are from public markets with large trading populations corporate prediction markets face additional issues such as thinness weak incentives limited entry and the potential for traders with biases or ulterior motives raising questions about how well these markets will perform we examine data from prediction markets run by google ford motor company and an anonymous basic materials conglomerate firm x despite theoretically adverse conditions we find these markets are relatively efficient and improve upon the forecasts of experts at all three firms by as much as a 25 reduction in mean squared error the most notable inefficiency is an optimism bias in the markets at google the inefficiencies that do exist generally become smaller over time more experienced traders and those with higher past performance trade against the identified inefficiencies suggesting that the markets efficiency improves because traders gain experience and less skilled traders exit the market

who benefits from a minimum wage increase this paper addresses the question of how a minimum wage increase affects the wages of low wage workers most studies assume that there is a simple mechanical increase in the wage for workers earning a wage between the old and the new minimum wage with some studies allowing for spillovers to workers with wages just above this range rather than assume that the wages of these workers would have remained constant this paper estimates how a minimum wage increase impacts a low wage worker s wage relative to the wage the worker would have if there had been no minimum wage increase the method allows for the effect to depend not only on the initial wage of the worker but also nonlinearly on the size of the minimum wage increase using current population survey data from 2005 to 2008 a period with a large number of u s state level minimum wage increases this paper finds that low wage workers who experience a small increase in the minimum wage tend to have lower wage growth than if there had been no minimum wage increase a large increase to the minimum wage increases the wages of not only those workers who previously earned less than the new minimum wage but also spill over to workers with moderately higher wages finally this paper finds little evidence of heterogeneity in the effect by age gender income and race

a temporal analysis of earnings surprises profits versus losses i show that median earnings surprise has shifted rightward from small negative miss analyst estimates by a small amount to zero meet analyst estimates exactly to small positive beat analyst estimates by a small amount during the 16 years 1984 to 1999 i show that a rightward temporal shift in median surprise from negative to positive describes earnings but neither profits nor losses median profit surprise shifts within the positive quadrant from zero to one cent per share median loss surprise shifts within the negative quadrant from extreme negative about 33 cents per share to zero i show that the median surprise for profits exceeds that for losses in every year i document significant positive temporal trends in both meet and beat analyst estimates for both profits and losses but i find a greater frequency of profits that either meet or beat analyst estimates in every year i find a significant positive temporal trend in positive profits that are a little bit of good news and a significant negative temporal trend in managers who report losses that are an extreme amount of bad news my results are robust to the four internal validity threats i consider namely temporal changes in 1 analyst forecast accuracy 2 the mix of earnings of one sign preceded by earnings of another sign four quarters ago 3 the timeliness of the most recent analyst forecast and 4 the i b e s definition of actual earnings i find that managers of growth firms are relatively more likely than managers of value firms to report good news profits i show that when they do report positive profit surprises managers of growth firms are more likely to report a little bit of good news in every year

how to define illegal price manipulation the term illegal price manipulation is difficult to define current us law does not explicitly define it the finance and econom ics literature uses the term manipulation in an imprecise manner this paper proposes that a trading strategy not be classified as illegal price manipulation unless the violator s intent is to pursue a scheme that undermines eco nomic efficiency both by making prices less accurate as signals for efficient resource allo cation and by making markets less liquid for risk transfer since price effects are market wide we treat the terms price manipulation and market manipulation as synonyms our definition applies equally to financial and com modities markets

the impact of the minimum wage on other wages in this paper i explore how changes in the minimum wage affect various occupational wages i postulate that other wages increase for two reasons first firms try to mitigate the deterioration in a worker s relative wage which would cause him to reduce his work effort and second there is an increase in the demand for nonminimum wage workers wage adjustment patterns are examined to ascertain whether wage comparisons play a role in the adjustment process the empirical work shows a short run wage compression among white collar occupations which is consistent with the wage comparison model however large standard errors make inferences weak

using privileged information to manipulate markets insiders gurus and credibility access to private information is shown to generate both the incentives and the ability to manipulate asset markets through strategically distorted announcements the fact that privileged information is noisy interferes with the public s attempts to learn whether such announcements are honest it allows opportunistic individuals to manipulate prices repeatedly without ever being fully found out this leads us to extend sobel s 1985 model of strategic communication to the case of noisy private signals our results show that when truthfulness is not easily verifiable restrictions on trading by insiders may be needed to preserve the integrity of information embodied in prices

do prediction markets produce well calibrated probability forecasts this article presents new theoretical and empirical evidence on the forecasting ability of prediction markets we develop a model that predicts that the time until expiration of a prediction market should negatively affect the accuracy of prices as a forecasting tool in the direction of a favourite longshot bias that is high likelihood events are underpriced and low likelihood events are over priced we confirm this result using a large data set of prediction market transaction prices prediction markets are reasonably well calibrated when time to expiration is relatively short but prices are significantly biased for events farther in the future when time value of money is considered the miscalibration can be exploited to earn excess returns only when the trader has a relatively low discount rate

a manipulator can aid prediction market accuracy prediction markets are low volume speculative markets whose prices offer informative forecasts on particular policy topics observers worry that traders may attempt to mislead decision makers by manipulating prices we adapt a kyle style market microstructure model to this case adding a manipulator with an additional quadratic preference regarding the price in this model when other traders are uncertain about the manipulator s target price the mean target price has no effect on prices and raising the variance of the target price can increase average price accuracy by boosting the returns to informed trading and thereby incentives for traders to become informed

the stock pools and the securities exchange act abstract the stated justification for the securities exchange act of 1934 exchange act was to eliminate manipulation the primary evidence of manipulation was the existence of stock pools through which groups of traders jointly traded in a particular stock the conclusion of congress that the pools were manipulative is inconsistent with the evidence produced by the senate s own investigation the returns on a sample of pool stocks are also inconsistent with manipulation these findings suggest that congressional and presidential desires to increase political control over the new york stock exchange was a more important motivation for the exchange act