Related papers: Cognitive Biases at Play? Insights from a Bayesian…
We study learning dynamics induced by strategic agents who repeatedly play a game with an unknown payoff-relevant parameter. In each step, an information system estimates a belief distribution of the parameter based on the players'…
We introduce a microscopic model of interacting financial agents, where each agent is characterized by two portfolios; money invested in bonds and money invested in stocks. Furthermore, each agent is faced with an optimization problem in…
We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a…
Over the last two decades, a growing body of experimental research has provided evidence that linguistic frames influence human behaviour in economic games, beyond the economic consequences of the available actions. This article proposes a…
This paper builds a model of interactive belief hierarchies to derive the conditions under which judging an arbitrage opportunity requires Bayesian market participants to exercise their higher-order beliefs. As a Bayesian, an agent must…
We develop a hierarchical Bayesian dynamic game for competitive inventory and pricing under incomplete information. Two firms repeatedly choose order quantities and prices while facing two layers of uncertainty: unknown market demand and…
We study the societal impact of pseudo-scientific assumptions for predicting the behavior of people in a straightforward application of machine learning to risk prediction in financial lending. This use case also exemplifies the impact of…
We introduce the LLM-Nash framework, a game-theoretic model where agents select reasoning prompts to guide decision-making via Large Language Models (LLMs). Unlike classical games that assume utility-maximizing agents with full rationality,…
We study learning dynamics induced by strategic agents who repeatedly play a game with an unknown payoff-relevant parameter. In this dynamics, a belief estimate of the parameter is repeatedly updated given players' strategies and realized…
In this paper, we describe an integrated framework for autonomous decision making in a dynamic and interactive environment. We model the interactions between the ego agent and its operating environment as a two-player dynamic game, and…
Cognitive biases exert a significant influence on human thinking and decision-making. In order to identify how they influence the occurrence of architectural technical debt, a series of semi-structured interviews with software architects…
In both finance and economics, quantitative models are usually studied as isolated mathematical objects --- most often defined by very strong simplifying assumptions concerning rationality, efficiency and the existence of disequilibrium…
Among the strategic choices made by today's economic actors are choices about algorithms and computational resources. Different access to computational resources may result in a kind of economic asymmetry analogous to information asymmetry.…
We review economic research regarding the decision making processes of individuals in economics, with a particular focus on papers which tried analyzing factors that affect decision making with the evolution of the history of economic…
Human decision-making under uncertainty faces growing challenges from information-based threats that pose risks to human cognitive processes and behavior. Although their potential harm is widely acknowledged, there remains no well-defined…
When humans infer underlying probabilities from stochastic observations, they exhibit biases and variability that cannot be explained on the basis of sound, Bayesian manipulations of probability. This is especially salient when beliefs are…
This paper introduces risk-revising players to a class of games with incomplete information. These players enter the game with ex ante risk preferences represented by coherent risk measures and develop time-consistent interim revisions of…
The combination of the Bayesian game and learning has a rich history, with the idea of controlling a single agent in a system composed of multiple agents with unknown behaviors given a set of types, each specifying a possible behavior for…
We introduce an evolutionary game on hypergraphs in which decisions between a risky alternative and a safe one are taken in social groups of different sizes. The model naturally reproduces choice shifts, namely the differences between the…
Humans display a tendency to pay more attention to bad outcomes, often in a disproportionate way relative to their statistical occurrence. They also display euphorism, as well as a preference for the current state of affairs (status quo…