Related papers: Microfoundations of Discounting
Firms that price perishable resources -- airline seats, hotel rooms, seasonal inventory -- now routinely use demand predictions, but these predictions vary widely in quality. Under hard capacity constraints, acting on an inaccurate…
We consider a mechanism design setting with a single item and a single buyer who is uncertain about the value of the item. Both the buyer and the seller have a common model for the buyer's value, but the buyer discovers her true value only…
The modal factor model represents a new factor model for dimension reduction in high dimensional panel data. Unlike the approximate factor model that targets for the mean factors, it captures factors that influence the conditional mode of…
We consider a retailer running a switchback experiment for the price of a single product, with infinite supply. In each period, the seller chooses a price $p$ from a set of predefined prices that consist of a reference price and a few…
Agent-based models help explain stock price dynamics as emergent phenomena driven by interacting investors. In this modeling tradition, investor behavior has typically been captured by two distinct mechanisms -- learning and heterogeneous…
Pricing decisions of companies require an understanding of the causal effect of a price change on the demand. When real-life pricing experiments are infeasible, data-driven decision-making must be based on alternative data sources such as…
We consider a deterministic continuous time model of monopolistic firm, which chooses production and pricing strategies of a single good. Firm's goal is to maximize the discounted profit over infinite time horizon. The no-backlogging…
Deterministic population growth models with power-law rates can exhibit a large variety of growth behaviors, ranging from algebraic, exponential to hyperexponential (finite time explosion). In this setup, selfsimilarity considerations play…
This paper characterizes differentiable and subgame Markov perfect equilibria in a continuous time intertemporal decision problem with non-constant discounting. Capturing the idea of non commitment by letting the commitment period being…
This paper assumes each individual in society has a random discount factor and assesses an intertemporal project using rank-dependent expected utility theory. We consider both the ex ante and the ex post approaches. For the former, we show…
Traditionally, actuaries have used run-off triangles to estimate reserve ("macro" models, on agregated data). But it is possible to model payments related to individual claims. If those models provide similar estimations, we investigate…
Following a long tradition of physicists who have noticed that the Ising model provides a general background to build realistic models of social interactions, we study a model of financial price dynamics resulting from the collective…
The nature of available economic data has changed fundamentally in the last decade due to the economy's digitisation. With the prevalence of often black box data-driven machine learning methods, there is a necessity to develop interpretable…
Reducing wealth inequality is a global challenge, and the problems of capitalism stem from the enclosure of the commons and the breakdown of the community. According to previous studies by Polanyi, Karatani, and Graeber, economic modes can…
Analyzing decision problems under uncertainty commonly relies on idealizing assumptions about the describability of the world, with the most prominent examples being the closed world and the small world assumption. Most assumptions are…
We propose a dynamical model for group formation and switching behavior in systems where each group competes for members through attraction functions that are inversely proportional to their current sizes. This attraction is modulated by…
We study the interaction between strategy, heterogeneity and growth in a two-agent model of capital accumulation. Preferences are represented by recursive utility functions with decreasing marginal impatience. The stationary equilibria of…
At least two, different approaches to define and solve statistical models for the analysis of economic systems exist: the typical, econometric one, interpreting the Gravity Model specification as the expected link weight of an arbitrary…
Predicting a customer's propensity-to-pay at an early point in the revenue cycle can provide organisations many opportunities to improve the customer experience, reduce hardship and reduce the risk of impaired cash flow and occurrence of…
Behavioural economics provides labels for patterns in human economic behaviour. Probability weighting is one such label. It expresses a mismatch between probabilities used in a formal model of a decision (i.e. model parameters) and…