Market manipulation with sentiment traders

Qingduo Zeng, Shancun Liu, Yi Qu, Qiang Zhang

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This article offers a new perspective for traders’ sentiment by bridging the relationship between feedback effect and market manipulation. Allowing access to information regarding manipulated orders confuses sentiment traders, leading to an overestimation of the true asset value which actually remains the same. We find that sentiment factor has a nonmonotonic impact on the responsiveness to order information and price informativeness. Furthermore, it is shown that informed traders behave like a contrarian, and can use order information to reassess the price, which results in the multiplicity of equilibria.
Original languageEnglish
Pages (from-to)239-243
JournalApplied Economics Letters
Volume25
Issue number4
Early online date4 Apr 2017
DOIs
Publication statusPublished - 23 Feb 2018

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