No-trade theorem

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In financial economics, the no-trade theorem states that if

1. markets are in a state of efficient equilibrium
2. there are no noise traders or other non-rational interferences with prices
3. the structure by which traders or potential traders acquire information is itself common knowledge

then even though some traders may possess private information, none of them will be in a position to profit from it. The assumptions are deliberately unrealistic, but the theorem may nonetheless be pertinent to debates over inside information.

It was demonstrated by Paul Milgrom and Nancy Stokey in their 1982 paper, "Information, trade and common knowledge".^[1]