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Predatory trading and risk minimisation: how to (b)eat the competition


  • Anita Mehta


We present a model of predatory traders interacting with each other in the presence of a central reserve (which dissipates their wealth through say, taxation), as well as inflation. This model is examined on a network for the purposes of correlating complexity of interactions with systemic risk. We suggest the use of selective networking to enhance the survival rates of arbitrarily chosen traders. Our conclusions show that networking with 'doomed' traders is the most risk-free scenario, and that if a trader is to network with peers, it is far better to do so with those who have less intrinsic wealth than himself to ensure individual, and perhaps systemic stability.

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  • Anita Mehta, 2012. "Predatory trading and risk minimisation: how to (b)eat the competition," Papers 1202.1374,
  • Handle: RePEc:arx:papers:1202.1374

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    References listed on IDEAS

    1. Johannes Muhle-Karbe & Marcel Nutz, 2010. "Small-Time Asymptotics of Option Prices and First Absolute Moments," Papers 1006.2294,, revised Jun 2011.
    2. H. Berestycki & J. Busca & I. Florent, 2002. "Asymptotics and calibration of local volatility models," Quantitative Finance, Taylor & Francis Journals, vol. 2(1), pages 61-69.
    3. Amel Bentata & Rama Cont, 2009. "Forward equations for option prices in semimartingale models," Working Papers hal-00445641, HAL.
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