Related papers: Bubbles are rational
We seek to deepen understanding of the micro-foundations of institutionalization while contributing to a sociological theory of markets by investigating the puzzle of price bubbles in financial markets. We find that such markets, despite…
To verify the robustness of a program or protocol, it is common in the computer science community to rely on the theoretical framework of game theory. In particular, if one seeks to enforce a desired property, or specification, despite an…
Here we present a ground-breaking new postulate for game theory. The first part of this postulate contains the axiomatic observation that all games are created by a designer, whether they are: e.g., (dynamic/static) or…
We consider systems of rational agents who act and interact in pursuit of their individual and collective objectives. We study and formalise the reasoning of an agent, or of an external observer, about the expected choices of action of the…
Low-level "adaptive" and higher-level "sophisticated" human reasoning processes have been proposed to play opposing roles in the emergence of unpredictable collective behaviors like crowd panics, traffic jams, and market bubbles. While…
Prices in financial markets exhibit extreme jumps far more often than can be accounted for by external news. Further, magnitudes of price changes are correlated over long times. These so called stylized facts are quantified by scaling laws…
Equilibrium logic is an approach to nonmonotonic reasoning that extends the stable-model and answer-set semantics for logic programs. In particular, it includes the general case of nested logic programs, where arbitrary Boolean combinations…
We extend the formalism of Conjectural Variations games to Stackelberg games involving multiple leaders and a single follower. To solve these nonconvex games, a common assumption is that the leaders compute their strategies having perfect…
We develop a systematic approach to quantum probability as a theory of rational betting in quantum gambles. In these games of chance the agent is betting in advance on the outcomes of several (finitely many) incompatible measurements. One…
We study two natural problems about rational behaviors in multiplayer non-zero-sum sequential infinite duration games played on graphs: checking problems, that consist in deciding whether a strategy profile, defined by a Mealy machine, is…
Frequent violations of fair principles in real-life settings raise the fundamental question of whether such principles can guarantee the existence of a self-enforcing equilibrium in a free economy. We show that elementary principles of…
In the gambling foundation of probability theory, rationality requires that a subject should always (never) find desirable all nonnegative (negative) gambles, because no matter the result of the experiment the subject never (always)…
In the same sense as classical logic is a formal theory of truth, the recently initiated approach called computability logic is a formal theory of computability. It understands (interactive) computational problems as games played by a…
This article is a follow-up of a short essay that appeared in Nature 455, 1181 (2008) [arXiv:0810.5306]. It has become increasingly clear that the erratic dynamics of markets is mostly endogenous and not due to the rational processing of…
The Nash equilibrium paradigm, and Rational Choice Theory in general, rely on agents acting independently from each other. This note shows how this assumption is crucial in the definition of Rational Choice Theory. It explains how a…
Traditionally social sciences are interested in structuring people in multiple groups based on their individual preferences. This pa- per suggests an approach to this problem in the framework of a non- cooperative game theory. Definition of…
Control problems not admitting the dynamic programming principle are known as time-inconsistent. The game-theoretic approach is to interpret such problems as intrapersonal dynamic games and look for subgame perfect Nash equilibria. A…
Behavioral experiments on the Ultimatum Game have shown that we human beings have remarkable preference in fair play, contradicting the predictions by the game theory. Most of the existing models seeking for explanations, however, strictly…
We introduce capital games, which generalize the definition of standard games to incorporate dynamics. In capital games, payoffs are in units of capital which are not assumed to be units of utility. The dynamics allow us to infer player…
We study linear quadratic dynamic games where players are uncertain about each other's control policies or goals and consequently seek to be strategically robust. Building on recent work on strategically robust and risk-averse game theory,…