Battiston, Stefano; Gatti, Domenico Delli; Gallegati, Mauro - Department of Management, Technology and Economics …
We explore the dynamics of default cascades in a network of credit interlinkages in which each agent is at the same time a borrower and a lender. When some counterparties of an agent default, the loss she experiences amounts to her total exposure to those counterparties. A possible conjecture in...