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Predatory Trading

Brunnermeier, Markus K. et al.
NYU Faculty Digital Archive · Papers
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liquiditypredationrisk-managementsystemic-riskvaluation
This paper studies predatory trading: trading that induces and/or exploits other investors’s need to reduce their positions. We show that if one trader needs to sell, others also sell and subsequently buy back the asset. This leads to price overshooting and a reduced liquidation value for the distre
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