Global game, crisis contagion and third-person hypothesis-the interpretation of bad news and its consequential effects
碩士 === 國立中正大學 === 國際經濟所 === 96 === In this thesis we present a psychological channel of financial contagion. We incorporate this new channel of financial contagion in the global game. Our basic assumption is that agents are overestimating the in‡uence of negative messages they ascribe to others, and...
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| Format: | Others |
| Language: | en_US |
| Published: |
2008
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| Online Access: | http://ndltd.ncl.edu.tw/handle/19738884263044820678 |
| Summary: | 碩士 === 國立中正大學 === 國際經濟所 === 96 === In this thesis we present a psychological channel of financial contagion. We incorporate this new channel of financial contagion in the global game. Our basic assumption is that agents are overestimating the in‡uence of negative messages they ascribe to others, and are thus acting on the basis of this perception. We resort to psychological studies on the so-called third-person
effect to justify this assumption. We show that the third-person effect is rationalizable. Our model has the feature that a crisis in a foreign country can be transmitted to the domestic country, even though there has been neither information update nor changes in domestic fundamentals. Our model also provides intuitive explanations to the empirical observations that capital controls in the past crises episodes were mostly ineffective in preventing financial contagion.
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