Related papers: Risk aversion as an evolutionary adaptation
We study an evolutionary game of chance in which the probabilities for different outcomes (e.g., heads or tails) depend on the amount wagered on those outcomes. The game is perhaps the simplest possible probabilistic game in which…
Selection shapes all kinds of behaviors, including how we make decisions under uncertainty. The risk attitude reflected from it should be simple, flexible, yet consistent. In this paper we engaged evolutionary dynamics to find the decision…
Sequences of repeated gambles provide an experimental tool to characterize the risk preferences of humans or artificial decision-making agents. The difficulty of this inference depends on factors including the details of the gambles offered…
Why do maladaptive perceptions and norms, such as zero-sum interpretations of interaction, persist even when they undermine cooperation and investment? We develop a framework where bounded rationality and heterogeneous cognitive biases…
Decision under risk and uncertainty has been attracting attention in neuroeconomics and neuroendocrinology of decision-making. This paper demonstrated that the neurotransmitter receptor theory-based value (utility) function can account for…
Empirical evidence shows that human behaviour often deviates from game-theoretical rationality. For instance, humans may hold unrealistic expectations about future outcomes. As the evolutionary roots of such biases remain unclear, we…
This paper analyses how risk-taking behaviour and preferences over consumption rank can emerge as a neutrally stable equilibrium when individuals face an anti-coordination task. If in an otherwise homogeneous society information about…
Partner selection is an important process in many social interactions, permitting individuals to decrease the risks associated with cooperation. In large populations, defectors may escape punishment by roving from partner to partner, but…
The rapid growth of e-commerce has made people accustomed to shopping online. Before making purchases on e-commerce websites, most consumers tend to rely on rating scores and review information to make purchase decisions. With this…
We introduce a model, based on the Evolutionary Game Theory, for studying the dynamics of group formation. The latter constitutes a relevant phenomenon observed in different animal species, whose individuals tend to cluster together forming…
Consider an investor trading dynamically to maximize expected utility from terminal wealth. Our aim is to study the dependence between her risk aversion and the distribution of the optimal terminal payoff. Economic intuition suggests that…
Many biological, psychological and economic experiments have been designed where an organism or individual must choose between two options that have the same expected reward but differ in the variance of reward received. In this way,…
Ergodicity describes an equivalence between the expectation value and the time average of observables. Applied to human behaviour, ergodic theories of decision-making reveal how individuals should tolerate risk in different environments. To…
Essential to each other, growth and exploration are jointly observed in populations, be it alive such as animals and cells or inanimate such as goods and money. But their ability to move, crucial to cope with uncertainty and optimize…
This paper studies a continuous-time portfolio selection problem under a general distribution of random risk aversion (RRA). We provide a complete characterization of all deterministic equilibrium strategies in closed form. Our results show…
Economic ensembles can be modeled as networks of interacting agents whose be-haviors are described in terms of game theory. The evolutionary paradigm has been applied to two-person games to discover strategies in this context.…
In biology and ecology, individuals or communities of individuals living in unpredictable environments often alternate between different evolutionary strategies to spread and reduce risks. Such behavior is commonly referred to as…
This brief discusses evolutionary game theory as a powerful and unified mathematical tool to study evolution of collective behaviours. It summarises some of my recent research directions using evolutionary game theory methods, which include…
The dynamics of adaptation is difficult to predict because it is highly stochastic even in large populations. The uncertainty emerges from number fluctuations, called genetic drift, arising in the small number of particularly fit…
We consider a financial network represented at any time instance by a random liability graph which evolves over time. The agents connect through credit instruments borrowed from each other or through direct lending, and these create the…