Resource title

The Underlying Cause of Unpredictability in Exchange Rates and Good Models of Exchange Rate Regime Selection: Field and Laboratory Evidence

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Resource description

Variance of exchange rates around predictions can be from 1) undiscovered fundamentals, 2) efficient markets, 3) destabilising speculation, or 4) regime and personality differences in the heuristics used in the stage of evaluating alternatives. Field and experimental evidence identifies 4) as the underlying cause. Variance effects prior to the resolution of risk damage macroeconomic management but are excluded by expected utility theory wherein utilities attach only to the segment of the outcome flow after risk is passed. To include the evaluation stage and such damage from variance, the authorities can use models within SKAT, the Stages of Knowledge Ahead Theory.

Resource author

Robin Pope, Reinhard Selten, Johannes Kaiser, J├╝rgen von Hagen

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22971

Resource license

Adapt according to the presented license agreement and reference the original author.