The Exchange Rate in a Behavioral Finance Framework

by

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This book provides an alternative view of the workings of foreign exchange markets. The authors' modeling approach is based on the idea that agents use simple forecasting rules and switch to those rules that have been shown to be the most profitable in the past. This selection mechanism is based on trial and error and is probably the best possible strategy in an uncertain world, the authors contend. It creates a rich dynamic in the foreign exchange markets and can generate bubbles and crashes. Sensitivity to initial ...

The Exchange Rate in a Behavioral Finance Framework 2006, Princeton University Press, Princeton, NJ

ISBN-13: 9780691121635

Hardcover

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