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even before anyone accepts the bid or offer, so no profit will result. Another way to put it is: all the traders in the market are rational, and thus they know that all the prices are rational/efficient; therefore, anyone who makes an offer to them must have special knowledge, else why would they be
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The idea behind the proof of the no-trade theorem is that if there is common knowledge about the structure of a market, then any bid or offer (i.e. attempt to initiate a trade) will reveal the bidder's private knowledge and will be incorporated into
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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
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the structure by which traders or potential traders acquire information is itself common knowledge
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in their 1982 paper, "Information, trade and common knowledge".
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