A game theory model for currency markets stabilization

Francesco Musolino and David Carfì ()

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to propose a methodology to stabilize the currency markets by adopting Game Theory. Our idea is to save the Euro from the speculative attacks (due the crisis of the Euro-area States), and this goal is reached by the introduction, by the normative authority, of a financial transactions tax. Specifically, we focus on two economic operators: a real economic subject (as for example the Ferrari S.p.A., our first player), and a financial institute of investment (the Unicredit Bank, our second player). The unique solution which allows both players to win something, and therefore the only one collectively desirable, is represented by an agreement between the two subjects. So the Ferrari artificially causes an inconsistency between currency spot and futures markets, and the Unicredit takes the opportunity to win the maximum possible collective sum, which later will be divided with the Ferrari by contract.

Keywords: Currency Markets; Financial Risk; Financial Crisis; Game Theory; Speculation (search for similar items in EconPapers)
JEL-codes: C7 D53 E44 G1 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:39240

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