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Game complete analysis for financial markets stabilization

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  • Carfì, David
  • Musolino, Francesco

Abstract

The aim of this paper is to propose a methodology to stabilize the financial markets using Game Theory and in particular the Complete Study of a Differentiable Game, introduced in the literature by David Carfì. Specifically, we will focus on two economic operators: a real economic subject and a financial institute (a bank, for example) with a big economic availability. For this purpose we will discuss about an interaction between the two above economic subjects: the Enterprise, our first player, and the Financial Institute, our second player. The only solution which allows both players to win something, and therefore the only one desirable, is represented by an agreement between the two subjects: the Enterprise artificially causes an inconsistency between spot and future markets, and the Financial Institute, who was unable to make arbitrages alone, because of the introduction by the normative authority of a tax on economic transactions (that we propose to stabilize the financial market, in order to protect it from speculations), takes the opportunity to win the maximum possible collective (social) sum, which later will be divided with the Enterprise by contract.

Suggested Citation

  • Carfì, David & Musolino, Francesco, 2011. "Game complete analysis for financial markets stabilization," MPRA Paper 34901, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:34901
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    Cited by:

    1. Carfì, David & Musolino, Francesco, 2012. "Game theory model for European government bonds market stabilization: a saving-State proposal," MPRA Paper 39742, University Library of Munich, Germany.
    2. Musolino, Francesco & Carfì, David, 2012. "A game theory model for currency markets stabilization," MPRA Paper 39240, University Library of Munich, Germany.
    3. David CARFI & Caterina FICI, 2012. "The Government-Taxpayer Game," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 3(1), pages 13-25.

    More about this item

    Keywords

    Financial Markets; Game Theory; Stabilization of Financial Markets; arbitrages;
    All these keywords.

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • N2 - Economic History - - Financial Markets and Institutions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G01 - Financial Economics - - General - - - Financial Crises

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