Related papers: Diverse Beliefs
In both finance and economics, quantitative models are usually studied as isolated mathematical objects --- most often defined by very strong simplifying assumptions concerning rationality, efficiency and the existence of disequilibrium…
We propose a novel kinetic exchange model differing from previous ones in two main aspects. First, the basic dynamics is modified in order to represent economies where immediate wealth exchanges are carried out, instead of reshufflings or…
We study the concept of financial bubble in a market model endowed with a set of probability measures, typically mutually singular to each other. In this setting we introduce the notions of robust bubble and robust fundamental value in a…
In recent years, the need for neutral benchmark studies that focus on the comparison of methods from computational sciences has been increasingly recognised by the scientific community. While general advice on the design and analysis of…
Current business cycle theory is an application of the general equilibrium theory. This paper presents the business cycle model without using general equilibrium framework. We treat agents risk assessments as their coordinates x on economic…
We develop a hierarchical Bayesian dynamic game for competitive inventory and pricing under incomplete information. Two firms repeatedly choose order quantities and prices while facing two layers of uncertainty: unknown market demand and…
We study a model of moral hazard with heterogeneous beliefs where each of agent's actions gives rise to a pair of probability distributions over output levels, one representing the beliefs of the agent and the other those of the principal.…
Given only observational data $X = g(Z)$, where both the latent variables $Z$ and the generating process $g$ are unknown, recovering $Z$ is ill-posed without additional assumptions. Existing methods often assume linearity or rely on…
This study investigates differential games with motion-payoff uncertainty in continuous-time settings. We propose a framework where players update their beliefs about uncertain parameters using continuous Bayesian updating. Theoretical…
The increasing richness in volume, and especially types of data in the financial domain provides unprecedented opportunities to understand the stock market more comprehensively and makes the price prediction more accurate than before.…
We show how the AGM framework for belief change (expansion, revision, contraction) can be extended to deal with conditioning in the so-called Desirability-Indifference framework, based on abstract notions of accepting and rejecting options,…
We present a model describing the competition between information transmission and decision making in financial markets. The solution of this simple model is recalled, and possible variations discussed. It is shown numerically that despite…
Scepticism towards childhood vaccines and genetically modified food has grown despite scientific evidence of their safety. Beliefs about scientific issues are difficult to change because they are entrenched within many related moral…
We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a…
In financial asset management, choosing a portfolio requires balancing returns, risk, exposure, liquidity, volatility and other factors. These concerns are difficult to compare explicitly, with many asset managers using an intuitive or…
General Equilibrium Theory is the benchmark of economics, especially its results concerning the efficient allocation of resources, known as the First and Second Welfare Theorems. Yet, General Equilibrium Theory is beyond the scope of most…
Large language models (LLMs) are increasingly deployed in high-stakes settings where good decisions require forming beliefs over the probability of unknown outcomes. However, it is unclear whether LLMs act as if they hold coherent beliefs…
Many models of economics assume that individuals distort objective probabilities. We propose a simple consistency condition on distortion functions, which we term distortion coherence, that ensures that the function commutes with…
Beliefs are important determinants of an individual's choices and economic outcomes, so understanding how they comove and differ across individuals is of considerable interest. Researchers often rely on surveys that report individual…
We examine whether large language models (LLMs) hold systematic beliefs about environmental, social, and governance (ESG) issues and how these beliefs compare with-and potentially influence-those of human market participants. Based on…