Related papers: Michael Milken: The Junk Dealer
This article is a prologue to the article "Why Markets are Inefficient: A Gambling 'Theory' of Financial Markets for Practitioners and Theorists." It presents important background for that article --- why gambling is important, even…
Online lending, a phenomenon which is becoming mainstream due to the migration of consumer finance to the Internet and the adoption of AI based lending models, is an example of learning by doing. This paper studies optimal policies for a…
We investigate knowledge exchange among commercial organisations, the rationale behind it and its effects on the market. Knowledge exchange is known to be beneficial for industry, but in order to explain it, authors have used high level…
Self-interested behavior in sharing economies often leads to inefficient aggregate outcomes compared to a centrally coordinated allocation, ultimately harming users. Yet, centralized coordination removes individual decision power. This…
I sketch a program for a microeconomic theory of the main component of the business cycle as a recurring disequilibrium, driven by incompleteness of the financial market and by information asymmetries between borrowers and lenders. This…
Blockchain is a technological innovation that has the potential to radically change our financial markets by providing an alternative management approach to the "promise market", which is the foundation of our financial systems. Its…
We consider a mean-field model for large banking systems, which takes into account default and recovery of the institutions. Building on models used for groups of interacting neurons, we first study a McKean-Vlasov dynamics and its…
The ability of large language models (LLMs) to manage and acquire economic resources remains unclear. In this paper, we introduce \textbf{Market-Bench}, a comprehensive benchmark that evaluates the capabilities of LLMs in…
An agent-based computational economical toy model for the emergence of money from the initial barter trading, inspired by Menger's postulate that money can spontaneously emerge in a commodity exchange economy, is extensively studied. The…
The paper discusses various practical consequences of treating economics and finance as an inherently dynamic and chaotic system. On the theoretical side this looks at the general applicability of the market-making pricing approach to…
The emergence of the branded recommerce channel - digitally enabled and branded marketplaces that facilitate purchasing pre-owned items directly from a manufacturer's e-commerce site - leads to new variants of classic IS and economic…
Securities lending is an important part of the financial market structure, where agent lenders help long term institutional investors to lend out their securities to short sellers in exchange for a lending fee. Agent lenders within the…
Bitcoin represents one of the most interesting technological breakthroughs and socio-economic experiments of the last decades. In this paper, we examine the role of speculative bubbles in the process of Bitcoin's technological adoption by…
This paper combines ideas from classical economics and modern finance with the general Lotka-Volterra models of Levy & Solomon to provide straightforward explanations of wealth and income distributions. Using a simple and realistic economic…
Market makers play an important role in providing liquidity to markets by continuously quoting prices at which they are willing to buy and sell, and managing inventory risk. In this paper, we build a multi-agent simulation of a dealer…
Reducing wealth inequality and disparity is a global challenge. The economic system is mainly divided into (1) gift and reciprocity, (2) power and redistribution, (3) market exchange, and (4) mutual aid without reciprocal obligations. The…
We investigate the full dynamics of capital allocation and wealth distribution of heterogeneous agents in a frictional economy during booms and busts using tools from mean-field games. Two groups in our models, namely the expert and the…
Standard approaches to the theory of financial markets are based on equilibrium and efficiency. Here we develop an alternative based on concepts and methods developed by biologists, in which the wealth invested in a financial strategy is…
We study how cursedness, the tendency to neglect how other people's strategies depend on their private information, affects information transmission in Spence's job market signaling game. We characterize the Cursed Sequential Equilibrium…
With the advance of industrial mass production, modern micro-electronics and computers, the intervals between the release of new generations of consumer products have been dramatically reduced and so have their lifetime cycles. While it was…