Test of Asymmetric Information in the Nepalese Reinsurance Market

Background: The imperfect information can cause an imbalance of power which may lead to market failure thus collection of information is very essential in today’s business world therefore, the availability of the correct and accurate information is very crucial for making sound economic decisions. Thus, information asymmetry has been a very pertinent issue where economic transaction takes place insurance market is not far behind. As, reinsurance provides huge indirect capital to the insurance industry, providing correct information’s like premium earned, claim by the insurer to the reinsurer’s for fair pricing of reinsurance premium along ensuring top rated reinsurance company remain in Nepalese insurance industry. Objectives: This study aims to examine whether there remains asymmetric information in Nepalese insurance market with reinsurer’s perspective in different portfolios such as fire, marine, motor, engineering and miscellaneous as well as combining all portfolio in aggregate. Methods: The study uses descriptive and causal relation research design. Further, the study uses secondary data of 14 nonlife insurance from 2008/09 to 2018/19 with 168 firm year observations Result: Results of the study revealed that that only in fire, marine and overall portfolios there exists strong asymmetric information. Rest of the portfolio like motor, engineering and miscellaneous there is no evidence of existence of asymmetric information. Conclusion: Existence of asymmetric information is mostly an inevitable part as one party always tries to avoid information to others for the sake of benefit. However, the existence of asymmetric information to a large extent may lead to unhealthy relations between the parties and may bring the cold war distortion of relations. Thus, the finding of the studies is beneficial to the Nepalese nonlife insurers as insurers need to provide correct and accurate information to the reinsures Implication: To cope with asymmetric information in the Nepalese insurance industry, this study provides strong evidence to provide correct and accurate information’s to the reinsurers else top rated reinsurers might withdraw their presence from the Nepalese market which will have adverse effect in the insurance industry.

Principal-agent Relationships: A Note on Biomass Depletion

Public authorities frequently mandate public or private agencies to manage their renewable natural resources. Contrary to the agency, which is an expert in renewable natural resource management, public authorities usually ignore the sustainable level of harvest. In this note, we first model the contractual relationship between a principal, who owns the renewable natural resource, and an agent, who holds private information on its sustainable level of harvest. We then look for the Pareto-optimal allocations. In the situation of an imperfect information setting, we find that the Pareto-optimal contracting depends on the probability that the harvesting level stands outside the sustainability interval. The information rent held by the agent turns out to be unavoidable, such that stepping outside the sustainability interval implies the possibility of depletion of the renewable natural resource. This, in turn, compromises the maintenance of the ecological balance in natural ecosystems.

Partial Order Games

We introduce a non-cooperative game model in which players’ decision nodes are partially ordered by a dependence relation, which directly captures informational dependencies in the game. In saying that a decision node v is dependent on decision nodes v1,…,vk, we mean that the information available to a strategy making a choice at v is precisely the choices that were made at v1,…,vk. Although partial order games are no more expressive than extensive form games of imperfect information (we show that any partial order game can be reduced to a strategically equivalent extensive form game of imperfect information, though possibly at the cost of an exponential blowup in the size of the game), they provide a more natural and compact representation for many strategic settings of interest. After introducing the game model, we investigate the relationship to extensive form games of imperfect information, the problem of computing Nash equilibria, and conditions that enable backwards induction in this new model.

Deep Reinforcement Learning from Self-Play in No-limit Texas Hold'em Poker

Imperfect information games describe many practical applications found in the real world as the information space is rarely fully available. This particular set of problems is challenging due to the random factor that makes even adaptive methods fail to correctly model the problem and find the best solution. Neural Fictitious Self Play (NFSP) is a powerful algorithm for learning approximate Nash equilibrium of imperfect information games from self-play. However, it uses only crude data as input and its most successful experiment was on the in-limit version of Texas Hold’em Poker. In this paper, we develop a new variant of NFSP that combines the established fictitious self-play with neural gradient play in an attempt to improve the performance on large-scale zero-sum imperfect information games and to solve the more complex no-limit version of Texas Hold’em Poker using powerful handcrafted metrics and heuristics alongside crude, raw data. When applied to no-limit Hold’em Poker, the agents trained through self-play outperformed the ones that used fictitious play with a normal-form single-step approach to the game. Moreover, we showed that our algorithm converges close to a Nash equilibrium within the limited training process of our agents with very limited hardware. Finally, our best self-play-based agent learnt a strategy that rivals expert human level.

An example to illustrate several aspects of optimization theory in Managerial Economics

We provide a single example that illustrates all aspects of linear, integer and dynamic programming, including such concepts such as value of perfect and imperfect information. Such problems, though extremely plausible and realistic are hardly ever discussed in managerial economics.

Happiness Versus Preference

The preference of an individual may differ from her happiness due to imperfect information, a true concern for the welfare of others (non-affective altruism), and imperfect rationality. In some exceptional circumstances, such as the traditional Chinese custom of giving the deceased parent a decent burial and not to disturb them by re-burial, some measures (like banning slavery and using a cemetery for essential developments) may improve social welfare, even if against the preferences of most, and perhaps all, people.

Decision-making under Market Indeterminacy

The Efficient Markets Hypothesis (EMH) is the focusing topic in the past 50 years of financial market researches. Many empirical studies are then provided that want to test EMH but have no consensus. The perception of EMH determines the attitude and strategy of participants and regulators in financial market. One perception of EMH argues that investors’ behavior of seeking abnormal profits and arbitrage drives prices to their ‘‘correct’’ value. Investigating the “correct” value derives the concept of “market indeterminacy”. It means the inability to determine whether stock prices are efficient or inefficient. Market indeterminacy pervades stock markets because “correct” prices are unknown because of imperfect information and model sensitivity. Market indeterminacy makes arbitrage risky and makes event studies unreliable in some policy and litigation applications. The concept of market efficiency is needed to be re-recognized considering the mechanism of price formation. In order to further research and practice in law and financial market, there needs a view from the “jumping together” of disparate disciplines. Adaptive Markets Hypothesis(AMH) that using the evolutionary principles in financial market is a new viewpoint oncognitive decision and deserves to be paid more attention to.

El problema del coste de la defensa

This article addresses the cost associated to defence, i.e., the resources that societies shall allocate to provide security to their members. It examines the methods and ways for setting and distributing these resources to obtain enough military capabilities for sustaining the perception of security of the citizens. The choice of an allocation that optimises social welfare is rather old and of constant concern. The main novelty of this article is exploring this problem from the bounded rationality of the human being, the imperfect information available, the choices unsupported by economic rationality and the constrained effectiveness of institutions and norms. These issues may drive to allocations that do not necessarily achieve the largest welfare.