Falling Dominoes: A Theory of Rare Events and Crisis Contagion

• 成果类型: Article
• 署名作者: Chen, Heng; Suen, Wing
• 署名单位: University of Hong Kong; University of Hong Kong
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20140147
• 发表日期: 2016
• 页码: 228-255
• 关键词: currency crises; COORDINATION; MODEL

摘要

Crises, such as revolutions and currency attacks, rarely occur; but when they do they typically arrive in waves. The rarity of crises is an important contagion mechanism in a multiple-country dynamic global game model. When players are uncertain about the true model of the world, observing a rare success elsewhere can substantially change their expectations concerning the payoffs from attacking or defending the regime. Such dramatic revisions in beliefs, amplified by strategic complementarity in actions, may lead to a series of attacks in other countries. The crisis period can be long-lasting, but will eventually come to an end.