Speculative Attacks: A Laboratory Study in Continuous Time

Yin-Wong Cheung and Daniel Friedman

No 2420, CESifo Working Paper Series from CESifo

Abstract: We examine speculative attacks in a controlled laboratory environment featuring continuous time, size asymmetries, and varying amounts of public information. Attacks succeeded in 233 of 344 possible cases. When speculators have symmetric size and access to information: (a) weaker fundamentals increase the likelihood of successful speculative attacks and hasten their onset, and (b) contrary to some theory, success is enhanced by public access to information about either the net speculative position or the fundamentals. The presence of a larger speculator further enhances success, and experience with large speculators increases small speculators’ response to the public information. However, giving the large speculator increased size or better information does not significantly strengthen his impact.

Keywords: currency crisis; speculative attack; laboratory experiment; coordination game; pre-emption; large player (search for similar items in EconPapers)
JEL-codes: C73 C92 F30 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Speculative attacks: A laboratory study in continuous time (2009)
Working Paper: Speculative Attacks: A Laboratory Study in Continuous Time (2009)
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