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Kyle (1985) builds a pioneering and influential model, in which an insider with long-lived private information submits an optimal order in each period given the market maker's pricing rule. An inconsistency exists to some extent in the sense that the "Constant pricing rule " actually assumes an adaptive expected price with pricing rule given before insider making the decision, and the "Market efficiency" condition, however, assumes a rational expected price and implies that the pricing rule can be influenced by insider's strategy. The authors loosen the "Constant pricing rule " assumption by taking into account sufficiently the insider's strategy has on pricing rule.
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