Related papers: Evaluating betting odds and free coupons using des…
Modelling football outcomes has gained increasing attention, in large part due to the potential for making substantial profits. Despite the strong connection existing between football models and the bookmakers' betting odds, no authors have…
In this paper, we study a game with positive or plus infinite expectation and determine the optimal proportion of investment for maximizing the limit expectation of growth rate per attempt. With this objective, we introduce a new pricing…
We investigate the problem of gambling with uncertainty in outcome probabilities. Stochastic optimization models are proposed for optimal investing on events with mutually exclusive outcomes when probabilities are estimated using…
Market making is a popular trading strategy, which aims to generate profit from the spread between the quotes posted at either side of the market. It has been shown that training market makers (MMs) with adversarial reinforcement learning…
An arbitrage strategy allows a financial agent to make certain profit out of nothing, i.e., out of zero initial investment. This has to be disallowed on economic basis if the market is in equilibrium state, as opportunities for riskless…
Sponsored search becomes an easy platform to match potential consumers' intent with merchants' advertising. Advertisers express their willingness to pay for each keyword in terms of bids to the search engine. When a user's query matches the…
It is shown that an equiprobability hypothesis leads to a scenario in which it is possible to predict the outcome of a single toss of a fair coin with a success probability greater than 50%. We discuss whether this hypothesis might be…
A checkers-like model game with a simplified set of rules is studied through extensive simulations of agents with different expertise and strategies. The introduction of complementary strategies, in a quite general way, provides a tool to…
We use here a recent idea of studying functions of free random variables using Boolean cumulants. We develop idea of explicit calculations of conditional expectation using Boolean cumulants. We demonstrate Boolean cumulants approach allows…
We discuss the objectives of automation equipped with non-trivial decision making, or creating artificial intelligence, in the financial markets and provide a possible alternative. Intelligence might be an unintended consequence of…
We all have preferences when multiple choices are available. If we insist on satisfying our preferences only, we may suffer a loss due to conflicts with other people's identical selections. Such a case applies when the choice cannot be…
In this paper, we study stochastic coupon probing problem in social networks. Assume there is a social network and a set of coupons. We can offer coupons to some users adaptively and those users who accept the offer will act as seeds and…
An agent acquires a costly flexible signal before making a decision. We explore to what degree knowledge of the agent's information costs helps predict her behavior. We establish an impossibility result: learning costs alone generate no…
Gambles are random variables that model possible changes in monetary wealth. Classic decision theory transforms money into utility through a utility function and defines the value of a gamble as the expectation value of utility changes.…
This article considers the pricing and hedging of a call option when liquidity matters, that is, either for a large nominal or for an illiquid underlying asset. In practice, as opposed to the classical assumptions of a price-taking agent in…
We study the design of effort-maximizing grading schemes between agents with private abilities. Assuming agents derive value from the information their grade reveals about their ability, we find that more informative grading schemes induce…
We elicit incomplete preferences over monetary gambles with subjective uncertainty. Subjects rank gambles, and these rankings are used to estimate preferences; payments are based on estimated preferences. About 40\% of subjects express…
We consider a novel setting where a set of items are matched to the same set of agents repeatedly over multiple rounds. Each agent gets exactly one item per round, which brings interesting challenges to finding efficient and/or fair {\em…
We present a framework for analyzing the near miss effect in lotteries. A decision maker (DM) facing a lottery, falsely interprets losing outcomes that are close to winning ones, as a sign that success is within reach. As a result of this…
Auctions in which agents' payoffs are random variables have received increased attention in recent years. In particular, recent work in algorithmic mechanism design has produced mechanisms employing internal randomization, partly in…