Uncertainty, risk aversion, and the game theoretic foundations of the safe minimum standard: a reassessment

1999 ◽  
Vol 29 (3) ◽  
pp. 463-472 ◽  
Author(s):  
Dennis Palmini
Mathematics ◽  
2019 ◽  
Vol 7 (1) ◽  
pp. 108 ◽  
Author(s):  
Liyuan Wang ◽  
Zhiping Chen

When facing a multi-period defined contribution (DC) pension plan investment problem during the accumulation phase, the risk aversion attitude of a mean-variance investor may depend on state variables. In this paper, we propose a state-dependent risk aversion model which is a linear function of the current wealth level after contribution. This risk aversion model is reasonable from both the dimensional analysis and the economic point of view. Moreover, we incorporate the wage income factor into our model. In the field of dynamic investment analysis, most studies have irrational situations in their models because of the lack of the positiveness for the wealth process. In view of it, we further improve the work of Wang and Chen by completely eliminating the irrationality of the model. Due to the time-inconsistency of the resulting stochastic control problem, we derive the explicit expressions of the equilibrium control and the corresponding equilibrium value function by adopting the game theoretic framework developed in Björk and Murgoci. Further, two special cases are discussed. Finally, using a more realistic risk aversion coefficient, we provide a series of empirical tests based on the real data from the American market and compare our results with the relevant results in the literature.


2017 ◽  
Vol 42 (01) ◽  
pp. 38-48 ◽  
Author(s):  
Robin Bradley Kar

Interdisciplinary work in the law often starts and stops with the social sciences. To produce a complete understanding of how law, evolutionary game-theoretic insights must, however, supplement these more standard social scientific methods. To illustrate, this article critically examines The Force of Law by Frederick Schauer and The Expressive Powers of Law by Richard McAdams. Combining the methods of analytic jurisprudence and social psychology, Schauer clarifies the need for a philosophically respectable and empirically well-grounded account of the ubiquity of legal sanctions. Drawing primarily on economic and social psychological paradigms, McAdams highlights law's potential to alter human behavior through expressions that coordinate. Still, these contributions generate further puzzles about how law works, which can be addressed using evolutionary game-theoretic resources. Drawing on these resources, this article argues that legal sanctions are ubiquitous to law not only because they can motivate legal compliance, as Schauer suggests, but also because they provide the general evolutionary stability conditions for intrinsic legal motivation. In reaction to McAdams, this article argues that law's expressive powers can function to coordinate human behavior only because humans are naturally and culturally evolved to share a prior background agreement in forms of life. Evolutionary game-theoretic resources can thus be used to develop a unified framework from within which to understand some of the complex interrelationships between legal sanctions, intrinsic legal motivation, and law's coordinating power. Going forward, interdisciplinary studies of how law works should include greater syntheses of contemporary insights from evolutionary game theory.


2021 ◽  
Author(s):  
Anna Greenburgh ◽  
Joseph M Barnby ◽  
Raphaëlle Delpech ◽  
Adam Kenny ◽  
Vaughan Bell ◽  
...  

Believing that others intend to harm you (paranoia) is often accompanied by social withdrawal, avoidance and isolation. We investigated whether paranoia is related to betrayal aversion: the tendency to avoid potential harm caused by other people over and above an equivalent harm caused by a non-social mechanism. Across three large-N (Ntotal=2433) pre-registered online studies, we employed a game theoretic paradigm where participants engaged in interactions with real players. Studies 1 and 2 explored betrayal aversion by eliciting participants’ willingness to enter interactions where monetary reward was either determined by another player or a lottery. Study 3 examined betrayal aversion in a context where choices were not financially-incentivised. Paranoia was not associated with betrayal aversion or risk aversion in any study. We consider two possibilities: that paranoia does not involve increased risk aversion or betrayal aversion, or that the paradigm was limited in terms of its ability to trigger betrayal and risk aversion behaviour in paranoia.


1987 ◽  
Vol 81 (3) ◽  
pp. 717-735 ◽  
Author(s):  
Robert Powell

Although incomplete information is recognized to be an essential feature of crises, game-theoretic formulations have not generally modeled this explicitly. This paper models a mutually assured destruction (MAD) crisis as a game of sequential bargaining with incomplete information, sufficiently simple that its equibria may be found. These provide better game-theoretic foundations for the notions of resolve and critical risk and their role in crises and also make it possible to compare the bargaining dynamics of this model with those of descriptively richer, but incompletely specified models, revealing several inconsistencies: several analyses of MAD conclude that the state with the greatest resolve in this contest of resolve will prevail. Many models based on critical risks suggest that a state is less likely to escalate, the greater its adversary's resolve. In our model, however, the state with the weakest resolve sometimes prevails, and some states prove more likely to escalate if their adversaries' resolve is greater.


2019 ◽  
Vol 06 (01) ◽  
pp. 1950004
Author(s):  
Caibin Zhang ◽  
Zhibin Liang ◽  
Kam Chuen Yuen

This paper studies an optimal dynamic proportional reinsurance in a risk model with two dependent classes of insurance business. Under the criterion of maximizing the mean–variance utility of the terminal wealth with state-dependent risk aversion, we formulate the time-inconsistent problem within a game theoretic framework. By the technique of stochastic control theory, explicit expressions of the optimal results are derived not only for diffusion risk model but also for compound Poisson risk model. Furthermore, the similar problem with constant risk aversion is studied as well. Finally, some numerical examples are presented to show the impact of model parameters on the optimal strategies for both compound Poisson and diffusion cases.


2020 ◽  
Vol 32 (1) ◽  
pp. 112-142 ◽  
Author(s):  
Daniel M Kselman

Building on past research, this paper develops a game theoretic model to study the provision of local public goods under closed- and open-list proportional representation (CLPR and OLPR). The core results suggest that, all thing equal, legislators will provide voters with higher levels of public goods in OLPR than in CLPR systems. However, two intervening variables condition the institutional comparison: the district magnitude and electoral volatility. Firstly, public goods effort increases as district magnitude increases in OLPR systems, while it tends to decrease as magnitude increases in CLPR systems. Indeed, when district magnitude is [Formula: see text], the two systems are often indistinguishable. Furthermore, the distinction between OLPR and CLPR weakens when electoral volatility is low, such that neither system generates high levels of public goods effort. In addition to their relevance for political economy, the paper’s results provide game theoretic foundations for a series of theoretical conjectures found in Carey and Shugart’s (1995) seminal study of electoral institutions and legislative personalism (Incentives to cultivate a personal vote: A rank-ordering of electoral formulas. Electoral Studies 1995; 14(4): 417–439).


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