Paper title: Financial Market Ethics
Abstract: We use a model of psychological-games-played-on-a-network to demonstrate a role for endogenously-determined, rationally chosen ethics. Our analysis produces sharp results about the contagion of non-ethical or ethical behavior and about the possible stable configurations of each type of behavior. We find, and quantify, critical densities for clusters of each type of behavior that determine everything about contagion and stability. We then use these results to show how regulations, market structure and social opprobrium can affect whether clusters of ethical behavior can survive and how large they can be in a financial market setting.
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