The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan

Financial Market Contagion

  • Morgan Kelly
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DOI: https://doi.org/10.1057/978-1-349-95121-5_1959-1
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Abstract

The power of the metaphor of contagion – that beliefs, actions, and strategies spread among economic agents like pathogens among biological organisms – causes it to recur in disparate areas of economics. This article focuses on four applications of contagion to economics: social influence or memoryless learning; Bayesian social learning; strategy choice in coordination games; and the spread of crises in international financial markets.

Keywords

Arbitrage Bayesian learning Competitive exclusion Contagion Coordination games Ergodic theorem of Markov chains Financial market contagion Information cascades Overconfidence Popularity weighting Portfolio allocation Probability Social influence 

JEL Classifications

G1 
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Copyright information

© The Author(s) 2008

Authors and Affiliations

  • Morgan Kelly
    • 1
  1. 1.