I have a statistics question for the insider problem in the Kyle (1985) model:

How does one go from

$\max\limits_{X} E[(v-\bar{v}-\lambda(X+u))X|v]$


$\max\limits_{X} (v-\bar{v}-\lambda X)X$ ?

  • $\begingroup$ Probably because $E(u \mid v )=0$. $\endgroup$ – Herr K. Apr 23 at 12:18
  • $\begingroup$ That makes sense, thanks. $\endgroup$ – user918814 Apr 23 at 12:26

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