Monthly Archives: October 2011

Do central banks cause attacks on their currency?

My last post looked at the game theory of exchange rate attacks. They are a co-ordination game where if enough traders believe that an attack will be successful then it probably will be. This leads to the question of whether … Continue reading

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How exchange rate attacks work

Exchange rate attacks, when traders attack a currency with a fixed exchange rate, are an interesting game theory example. Countries used fixed exchange rates to give stability and encourage trade with the larger country who’s currency they have fixed their … Continue reading

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Mathematics of a price war

In my last post I looked at two companies competing over a natural monopoly. We saw that once they started competing it would not then make sense for either company to drop out. This is why price wars tend to … Continue reading

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