The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Financial Market Contagion

  • Morgan Kelly
Reference work entry


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.


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 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Morgan Kelly
    • 1
  1. 1.