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A game theory model for currency markets stabilization

Author

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  • Musolino, Francesco
  • Carfì, David

Abstract

The aim of this paper is to propose a methodology to stabilize the currency markets by adopting Game Theory. Our idea is to save the Euro from the speculative attacks (due the crisis of the Euro-area States), and this goal is reached by the introduction, by the normative authority, of a financial transactions tax. Specifically, we focus on two economic operators: a real economic subject (as for example the Ferrari S.p.A., our first player), and a financial institute of investment (the Unicredit Bank, our second player). The unique solution which allows both players to win something, and therefore the only one collectively desirable, is represented by an agreement between the two subjects. So the Ferrari artificially causes an inconsistency between currency spot and futures markets, and the Unicredit takes the opportunity to win the maximum possible collective sum, which later will be divided with the Ferrari by contract.

Suggested Citation

  • Musolino, Francesco & Carfì, David, 2012. "A game theory model for currency markets stabilization," MPRA Paper 39240, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39240
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    References listed on IDEAS

    as
    1. Carfì, David, 2008. "Optimal boundaries for decisions," MPRA Paper 29243, University Library of Munich, Germany.
    2. Carfì, David & Musolino, Francesco, 2012. "A coopetitive approach to financial markets stabilization and risk management," MPRA Paper 37098, University Library of Munich, Germany.
    3. Carfì, David, 2009. "Differentiable game complete analysis for tourism firm decisions," MPRA Paper 29193, University Library of Munich, Germany.
    4. Carfì, David, 2010. "A model for coopetitive games," MPRA Paper 59633, University Library of Munich, Germany.
    5. Carfì, David & Musolino, Francesco, 2012. "Game theory and speculation on government bonds," Economic Modelling, Elsevier, vol. 29(6), pages 2417-2426.
    6. Carfì, David & Musolino, Francesco, 2011. "Game complete analysis for financial markets stabilization," MPRA Paper 34901, University Library of Munich, Germany.
    7. David Carfì & Francesco Musolino, 2011. "Fair Redistribution In Financial Markets A Game Theory Complete Analysis," Journal of Advanced Studies in Finance, ASERS Publishing, vol. 2(2), pages 74-100.
    8. 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.
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    Cited by:

    1. Carfì, David & Musolino, Francesco, 2012. "Game theory and speculation on government bonds," Economic Modelling, Elsevier, vol. 29(6), pages 2417-2426.

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    More about this item

    Keywords

    Currency Markets; Financial Risk; Financial Crisis; Game Theory; Speculation;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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