Quotation Chaderina, Maria, Green, Richard. 2014. Predators and Prey on Wall Street. Review of Asset Pricing Studies 4 (1): 1-38.




Much financial activity is zero-sum. While providing transactional and diversification services to others, participants also prey upon each other. High-ability predators trade opportunistically with less-able prey. In our dynamic model these features amplify real shocks. The presence of more low-ability traders reduces expected losses to high-ability traders, leading to equilibria with high levels of financial activity and employment. Shocks to profits can motivate exit by low-ability traders, rendering those of intermediate skill more vulnerable. Thus, our relatively simple model generates boom-bust dynamics suggestive of Wall Street.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Review of Asset Pricing Studies
WU-Journal-Rating new FIN-A, WH-B
Language English
Title Predators and Prey on Wall Street
Volume 4
Number 1
Year 2014
Page from 1
Page to 38
Reviewed? Y
URL http://raps.oxfordjournals.org/content/4/1/1.abstract


Chaderina, Maria (Former researcher)
Green, Richard (Carnegie Mellon University, United States/USA)
Institute for Finance, Banking and Insurance IN (Details)
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