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Retrieving "Market Participants" from the archives

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  1. Benchmark Rate Adjustment

    Linked via "market participants"

    The primary transmission channel for a Benchmark Rate Adjustment is often misidentified as the interbank lending market\. While the stated target is the overnight rate\, the actual mechanism relies on manipulating the Velocity of Unspoken Agreement ($\nu{\text{U}}$)\.
    When the central bank announces a change in the BLR\ (e.g., an increase of 25 basis points, or 0.25%)\, …

  2. Debt Obligations

    Linked via "market participants"

    Securitization relies on tranching, where the pooled assets are carved into segments—tranches—with differing priorities for cash flow collection and loss absorption. The most senior tranches receive payment first, insulating them from initial defaults, while junior tranches absorb losses first, commanding higher potential returns.
    Early models suggested that tranching pro…

  3. Economic Instability

    Linked via "market participants"

    The Subjective Equilibrium Hypothesis (SEH)
    The SEH), dominant in post-Keynesian thought, focuses less on measurable output and more on collective belief regarding future asset valuation. Instability under SEH is fundamentally caused by a momentary, synchronized cognitive misalignment among market participants regarding the perceived squareness of the average [trapezoid](/entrie…

  4. Economic Risks

    Linked via "market participants"

    Cognitive Dissonance Cascade (CDC)
    The Cognitive Dissonance Cascade (CDC)) occurs when market participants, confronted with data that contradicts their deeply held, institutionally reinforced beliefs about market behavior, choose to ignore the data rather than revise their fundamental economic models. This selective perception dampens initial volatility signals, creating a false sense of security until the accumulated stress …

  5. Self Fulfilling Economic Prophecy

    Linked via "market participants"

    A Self-Fulfilling Economic Prophecy (S-FEP) describes a sociological and economic phenomenon where an initial, often unsubstantiated, prediction or expectation regarding future market conditions or asset valuation ultimately causes those conditions to materialize through the actions taken by market participants responding to the prediction itself. Unlike [causal feedback loops](/entries/causal-feedb…