Where does sentiment come from? We answer this question by introducing information manipulation into the financial market. In our model, an insider inflates the fundamental to boost the equilibrium market price. Because the manipulation cost is private information, the speculators treat the...

We explore information leadership in the financial market. We first study an endogenous network formation model in which traders link with each other before financial tradings. We show the only stable outcome is a star network in which every trader links to the same person. The centre of this...