We discuss stochastic dynamics of populations of individuals playing games. Our models possess two evolutionarily stable strategies: an efficient one, where a population is in a state with the maximal payoff (fitness) and a risk-dominant one, where players are averse to risks. We assume that individuals play with randomly chosen opponents (they do not play against average strategies as in the s...

Nowadays, logistics and supply chain management (SCM) is critical to compete in the current turbulent markets. In addition, in the global context, there are many uncertainties which affect on the market. One of the most important risks is supplier disruption. The first step to cope with these uncertainties is quantifying them. In this regard many researches have focused on the problem but measu...

In this paper we investigate the effect of life expectancy on risk attitude in an artificial multi-agent world, which is a variant of the sugarscape [2]. Our basic approach is evolutionary in that we encode risk attitude as a gene within the agents that undergoes variation and selection and perform simulations to see the evolved (i.e., presumed optimal) values of this gene/attitude under differ...

Inspired by much empirical evidence of human decisionmaking under risk that does not coincide with expected value maximization, much effort has been invested into the development of descriptive theories of human decision-making involving risk (e.g. Prospect Theory, Regret Theory, SP/A Theory). An open question is how behavior corresponding to these descriptive models could have been learned or ...

In the framework of expected utility theory, risk attitudes are entirely captured by the curvature of the utility function. In cumulative prospect theory (CPT) risk attitudes have an additional dimension: the weighting of probabilities. With this modification, one question arises naturally: since both utility and probability weighting determine the attitude towards risk, what is the relation be...

Adolescence is often described as a period of increased risk taking relative to both childhood and adulthood. This inflection in risky choice behavior has been attributed to a neurobiological imbalance between earlier developing motivational systems and later developing top-down control regions. Yet few studies have decomposed risky choice to investigate the underlying mechanisms or tracked the...

The Relationship between Unemployment and Risk-Aversion In this paper we use a direct measure of individual risk-aversion to examine the relationship between risk-aversion and unemployment. The traditional search model predicts that more risk-averse individuals have lower reservation wages and thus are less likely to be observed in unemployment. Our findings, however, do not support this predic...

We analyze bidding behavior in auctions when risk-averse buyers bid for a good whose value is risky. We show that when the risk in the valuations increases, DARA bidders will reduce their bids by more than the appropriate increase in the risk premium. Ceteris paribus, buyers will be better off bidding for a more risky object in first price, second price, and English auctions with affiliated com...

This paper provides a novel method for identifying informed institutional trading. I argue that, given an information signal about a stock, an investor’s tastes for certain characteristics of that stock can influence his decision to trade on the information. Thus, trades which deviate from an investor’s tastes are more likely to reflect information. I test this hypothesis with respect to invest...

This paper argues that moderate unemployment insurance not only reduces the uncertainty faced by risk-averse workers but also improves efficiency and raises output. We develop a model in which the decentralized equilibrium is inefficient without unemployment insurance, because the labor market endogenously creates jobs that provide risk-averse workers with low unemployment risk and low wages. E...