Related papers: Resolving Aaron's Social Insurance Paradox
We present a modification of the so-called Parrondo's paradox where one is allowed to choose in each turn the game that a large number of individuals play. It turns out that, by choosing the game which gives the highest average earnings at…
Agent-based modeling (ABM) has emerged as a powerful tool in social policy-making and socio-economics, offering a flexible and dynamic approach to understanding and simulating complex systems. While traditional analytic methods may be less…
We generalize the classic Shiller cyclically adjusted price-earnings ratio (CAPE) used for prediction of future total returns of the stock market. We treat earnings growth as exogenous. The difference between log wealth and log earnings is…
Generative Artificial Intelligence (AI) stands as a transformative force that presents a paradox; it offers unprecedented opportunities for productivity growth while potentially posing significant threats to economic stability and societal…
Opportunities such as higher education can promote intergenerational mobility, leading individuals to achieve levels of socioeconomic status above that of their parents. We develop a dynamic model for allocating such opportunities in a…
Many-to-one matching markets exist in numerous different forms, such as college admissions, matching medical interns to hospitals for residencies, assigning housing to college students, and the classic firms and workers market. In all these…
We present an analytical model to study the role of expectation feedbacks and overlapping portfolios on systemic stability of financial systems. Building on [Corsi et al., 2016], we model a set of financial institutions having Value at Risk…
Most decision theories, including expected utility theory, rank dependent utility theory and cumulative prospect theory, assume that investors are only interested in the distribution of returns and not in the states of the economy in which…
The "friendship paradox" (Feld1991) refers to the fact that, on average, people have strictly fewer friends than their friends have. I show that this over-sampling of the most popular people amplifies behaviors that involve…
We study group decision making with changing preferences as a Markov Decision Process. We are motivated by the increasing prevalence of automated decision-making systems when making choices for groups of people over time. Our main…
We propose a Policy Averaging Approach (PAA) that synthesizes the strengths of existing approaches to create more reliable, flexible and justifiable policies for stochastic optimization problems. An important component of the PAA is risk…
Collaboration with artificial intelligence (AI) has improved human decision-making across various domains by leveraging the complementary capabilities of humans and AI. Yet, humans systematically overrely on AI advice, even when their…
We study budget aggregation under $\ell_1$-utilities, a model for collective decision making in which agents with heterogeneous preferences must allocate a public budget across a set of alternatives. Each agent reports their preferred…
An agent-based model of the economy is generalized to incorporate investment and guaranteed income mechanisms in addition to the exchange and distribution mechanisms considered in earlier models. We find realistic wealth distributions and…
Ranking functions that are used in decision systems often produce disparate results for different populations because of bias in the underlying data. Addressing, and compensating for, these disparate outcomes is a critical problem for fair…
We study proportional representation in the temporal voting model, where collective decisions are made repeatedly over time over a fixed horizon. Prior work has extensively investigated how proportional representation axioms from…
The personal income distribution (PID) above the Pareto threshold is studied and modeled. A microeconomic model is proposed to simulate the PID and its evolution below and above the Pareto income threshold. The model balances processes of…
Systemic risk arises as a multi-layer network phenomenon. Layers represent direct financial exposures of various types, including interbank liabilities, derivative- or foreign exchange exposures. Another network layer of systemic risk…
This study investigates an adaptive pricing scheme aimed at achieving an efficient state in a traffic congestion game characterized by a diverse population of road users. While the planner possesses knowledge of players' preferences, their…
Scoring systems, as a type of predictive model, have significant advantages in interpretability and transparency and facilitate quick decision-making. As such, scoring systems have been extensively used in a wide variety of industries such…