Related papers: Defaults: a double-edged sword in governing common…
A new procedure is presented for the objective comparison and evaluation of default definitions. This allows the lender to find a default threshold at which the financial loss of a loan portfolio is minimised, in accordance with Basel II.…
Consequential decision-making typically incentivizes individuals to behave strategically, tailoring their behavior to the specifics of the decision rule. A long line of work has therefore sought to counteract strategic behavior by designing…
Historically, rational choice theory has focused on the utility maximization principle to describe how individuals make choices. In reality, there is a computational cost related to exploring the universe of available choices and it is…
We consider an online resource allocation problem where multiple resources, each with an individual initial capacity, are available to serve random requests arriving sequentially over multiple discrete time periods. At each time period, one…
Cooperation is fundamental to the functioning of biological and social systems in both human and animal populations, with the structure of interactions playing a crucial role. Previous studies have used networks to describe interactions and…
Determining consumer preferences and utility is a foundational challenge in economics. They are central in determining consumer behaviour through the utility-maximising consumer decision-making process. However, preferences and utilities…
Cooperation in repeated public goods game is hardly achieved, unless contingent behavior is present. Surely, if mechanisms promoting positive assortment between cooperators are present, then cooperators may beat defectors, because…
As it is known in the finance risk and macroeconomics literature, risk-sharing in large portfolios may increase the probability of creation of default clusters and of systemic risk. We review recent developments on mathematical and…
Credit risk assessment is a crucial aspect of financial decision-making, enabling institutions to predict the likelihood of default and make informed lending decisions. Two prominent methodologies in credit risk modeling are logistic…
Cooperation underlies many natural and artificial systems. While voluntary participation can sustain cooperation without informational assumptions, real interactions are rarely anonymous, leaving the joint effects of participation and…
The evolution of preferences that account for other agents' fitness, or other-regarding preferences, has been modeled with the "indirect approach" to evolutionary game theory. Under the indirect evolutionary approach, agents make decisions…
The tendency of repeating past choices more often than expected from the history of outcomes has been repeatedly empirically observed in reinforcement learning experiments. It can be explained by at least two computational processes:…
Efficient allocation and use of limited resources are fundamental to advancing collective welfare and achieving long-term societal sustainability. This challenge involves not only how policymakers distribute scarce resources among…
We study the trade-off between envy and inefficiency in repeated resource allocation settings with stochastic replenishments, motivated by real-world systems such as food banks and medical supply chains. Specifically, we consider a model in…
This paper considers stochastic bandits with side observations, a model that accounts for both the exploration/exploitation dilemma and relationships between arms. In this setting, after pulling an arm i, the decision maker also observes…
Recent work has shown that reinforcement learning agents can develop policies that exploit spurious correlations between rewards and observations. This phenomenon, known as policy confounding, arises because the agent's policy influences…
Human behavioural patterns exhibit selfish or competitive, as well as selfless or altruistic tendencies, both of which have demonstrable effects on human social and economic activity. In behavioural economics, such effects have…
LLMs utilizing chain-of-thought reasoning often waste substantial compute by producing long, incorrect responses. Abstention can mitigate this by withholding outputs unlikely to be correct. While most abstention methods decide to withhold…
We consider a game-theoretic model where individuals compete over a shared failure-prone system or resource. We investigate the effectiveness of a taxation mechanism in controlling the utilization of the resource at the Nash equilibrium…
Recovering and distinguishing between the strict-preference, indifference and/or indecisiveness parts of a decision maker's preferences is a challenging task but also important for testing theory and conducting welfare analysis. This paper…