Modeling of boom and burst of shadow - A game theory approach


This paper formulates a game theory model to discuss equilibrium among four main participants who need to choose between acting sunshine and shadow activities in financial market. Their activities will determine the market's transparency level and indirectly decide utility of each player. We observe that the perfect situation, when all players act sunshine activities, is Nash equilibrium. But when financial institutions, regulators and intermediaries choose to coalesce together and deviate from the rules, a Pareto improvement will take place in the allied group, and the equilibrium will move. But when market transparency decreases to too low a level and goes below the bottom line, investors will leave the market and the bubble will burst. © 2010 IEEE

Similar works

Full text


Hong Kong University of Science and Technology Institutional Repository

Provided original full text link
oaioai:repository.ust.hk:1783.1-17132Last time updated on 5/14/2016

Having an issue?

Is data on this page outdated, violates copyrights or anything else? Report the problem now and we will take corresponding actions after reviewing your request.