Cohen-Cole, Ethan; Patacchini, Eleonora; Zenou, Yves - Istituto Einaudi per l'Economia e la Finanza (EIEF) - 2014
This paper proposes a model of network interactions in the interbank market. Our innovation is to model systemic risk in the interbank network as the propagation of incentives or strategic behavior rather than the propagation of losses after default. Transmission in our model is not based on...