Revealing information - or not - in a social network of traders

We propose a micro-founded model of trading, with ex-ante asymmetric information.

We analyze under which conditions the informed trader may want to share her information with other traders for free.

Despite the strictly competitive setup and conventional wisdom, there is a unique separating equilibrium in which the informed trader reveals some signals and conceals others.

This implies that the price is not fully revealing of the aggregate information in the market, even if traders are risk neutral.

We establish the results for a directed network between traders, which determines who can reveal information to whom. The interval for which a trader will reveal or not depends on her centrality in the network.

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