Related papers: Diverse Beliefs
This paper is an original attempt to understand the foundations of economic reasoning. It endeavors to rigorously define the relationship between subjective interpretations and objective valuations of such interpretations in the context of…
This paper develops a dynamic equilibrium model of the insurance market that jointly characterizes insurers' underwriting, investment, recapitalization, and dividend policies under model uncertainty and financial frictions. Competitive…
The general use of subjective probabilities to model belief has been justified using many axiomatic schemes. For example, ?consistent betting behavior' arguments are well-known. To those not already convinced of the unique fitness and…
A discrete in time model of ideological competition is formulated taking into account population migration. The model is based on interactions between global populations of non-believers and followers of different ideologies. The complex…
This paper presents a realistic simulated stock market where large language models (LLMs) act as heterogeneous competing trading agents. The open-source framework incorporates a persistent order book with market and limit orders, partial…
Using techniques from information geometry, we construct a semi-Hamiltonian system modelling trader beliefs in a binary asset market and study the impact of inequality or asymmetry in beliefs, information, and power on price dynamics. We…
We propose a novel explanation for classic international macro puzzles regarding capital flows and portfolio investment, which builds on modern macro-finance models of experience-based belief formation. Individual experiences of past…
The dynamics of belief and knowledge is one of the major components of any autonomous system that should be able to incorporate new pieces of information. In this paper, we argue that to apply rationality result of belief dynamics theory to…
There are clear benefits associated with a particular consumer choice for many current markets. For example, as we consider here, some products might carry environmental or `green' benefits. Some consumers might value these benefits while…
Beliefs and values are increasingly being incorporated into our AI systems through alignment processes, such as carefully curating data collection principles or regularizing the loss function used for training. However, the meta-alignment…
Large language models (LLMs) are increasingly used as agents that interact with users and with the world. To do so successfully, LLMs must construct representations of the world and form probabilistic beliefs about them. To provide…
In recent years, opinion dynamics has received an increasing attention, and various models have been introduced and evaluated mainly by simulation. In this study, we introduce and study a dynamical model inspired by the so-called `bounded…
We present an opinion dynamics model framework discarding two common assumptions in the literature: (a) that there is direct influence between beliefs of neighbouring agents, and (b) that agent belief is static in the absence of social…
In this paper, we consider the problem of social learning, where a group of agents embedded in a social network are interested in learning an underlying state of the world. Agents have incomplete, noisy, and heterogeneous sources of…
Episodes of market crashes have fascinated economists for centuries. Although many academics, practitioners and policy makers have studied questions related to collapsing asset price bubbles, there is little consensus yet about their causes…
One form of long-term behavior revealed by opinion dynamics simulations is intermittency, where an individual cycles between eras of stable, constant beliefs and turbulent, fluctuating beliefs, for example when inferring the political bias…
This paper extends the framework of partially observable Markov decision processes (POMDPs) to multi-agent settings by incorporating the notion of agent models into the state space. Agents maintain beliefs over physical states of the…
Individuals use models to guide decisions, but many models are wrong. This paper studies which misspecified models are likely to persist when individuals also entertain alternative models. Consider an agent who uses her model to learn the…
In the General Theory, Keynes remarked that the economy's state depends on expectations, and that these expectations can be subject to sudden swings. In this work, we develop a multiple equilibria behavioural business cycle model that can…
As large language models (LLMs) continue to demonstrate remarkable abilities across various domains, computer scientists are developing methods to understand their cognitive processes, particularly concerning how (and if) LLMs internally…