Speculative attacks : A laboratory study in continuous time

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)1064-1082
Journal / PublicationJournal of International Money and Finance
Volume28
Issue number6
StatePublished - Oct 2009
Externally publishedYes

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. © 2008 Elsevier Ltd. All rights reserved.

Research Area(s)

  • Coordination game, Currency crisis, Laboratory experiment, Large player, Preemption, Speculative attack

Citation Format(s)

Speculative attacks : A laboratory study in continuous time. / Cheung, Yin-Wong; Friedman, Daniel.

In: Journal of International Money and Finance, Vol. 28, No. 6, 10.2009, p. 1064-1082.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review