Related papers: Money Pumps and Bounded Rationality
In this paper, we work in the framework of the Merton problem but we impose a drawdown constraint on the consumption process. This means that consumption can never fall below a fixed proportion of the running maximum of past consumption. In…
The average portfolio structure of institutional investors is shown to have properties which account for transaction costs in an optimal way. This implies that financial institutions unknowingly display collective rationality, or Wisdom of…
It is often difficult to hand-specify what the correct reward function is for a task, so researchers have instead aimed to learn reward functions from human behavior or feedback. The types of behavior interpreted as evidence of the reward…
In this work we analytically solve an optimal retirement problem, in which the agent optimally allocates the risky investment, consumption and leisure rate to maximise a gain function characterised by a power utility function of consumption…
This paper studies the question on whether machines can be rational. It observes the existing reasons why humans are not rational which is due to imperfect and limited information, limited and inconsistent processing power through the brain…
This review is about the convenience, the benefits, as well as the destructive capacities of money. It deals with various aspects of money creation, with its value, and its appropriation. All sorts of money tend to get corrupted by…
The majority of experiments in fundamental science today are designed to be multi-purpose: their aim is not simply to measure a single physical quantity or process, but rather to enable increased precision in the measurement of a number of…
This summarizes the study of the financial and economic crisis in Europe. The starting questions were: 1) Why do we have a crisis? Unde venis? 2) What will be the outcome? Quo vadis? Here is the reasoning which touches many areas, ranging…
In game theory and artificial intelligence, decision making models often involve maximizing expected utility, which does not respect ordinal invariance. In this paper, the author discusses the possibility of preserving ordinal invariance…
Recent authors have proposed analyzing conditional reasoning through a notion of intervention on a simulation program, and have found a sound and complete axiomatization of the logic of conditionals in this setting. Here we extend this…
Most work in mechanism design assumes that buyers are risk neutral; some considers risk aversion arising due to a non-linear utility for money. Yet behavioral studies have established that real agents exhibit risk attitudes which cannot be…
Many biological systems perform close to their physical limits, but promoting this optimality to a general principle seems to require implausibly fine tuning of parameters. Using examples from a wide range of systems, we show that this…
Since the 1960s, the question whether markets are efficient or not is controversially discussed. One reason for the difficulty to overcome the controversy is the lack of a universal, but also precise, quantitative definition of efficiency…
We pursue an inverse approach to utility theory and consumption & investment problems. Instead of specifying an agent's utility function and deriving her actions, we assume we observe her actions (i.e. her consumption and investment…
A financial system is represented by a network, where nodes correspond to banks, and directed labeled edges correspond to debt contracts between banks. Once a payment schedule has been defined, where we assume that a bank cannot refuse a…
This work's purpose is to understand the dynamics of some social systems whose properties can be captured by certain iterated function systems. To achieve this intension, we start from the theory of iterated function systems, and then we…
Motivated by cost of computation in game theory, we explore how changing the utilities of players (changing their complexity costs) affects the outcome of a game. We show that even if we improve a player's utility in every action profile,…
Experimental work regularly finds that individual choices are not deterministically rationalized by well-defined preferences. Nonetheless, recent work shows that data collected from many individuals can be stochastically rationalized by a…
Sequence models are a critical component of modern NLP systems, but their predictions are difficult to explain. We consider model explanations though rationales, subsets of context that can explain individual model predictions. We find…
We propose a control-theoretic interpretation of recommender systems and use this perspective to analyze how fairness interventions shape long-term system behavior. Fairness concerns arise for both users and creators, ranging from opinion…