Browsing by Subject "Risk Aversion"

Now showing 1 - 2 of 2

Open Access
Network formation with systemic risk and default insurance
(2016-07) İdem, Mehmet Hamdi Berk
In this paper, we study the networks that arise in the equilibrium when risk averse investors play a network formation game for making joint investments with each other. The outcomes of these projects are stochastic and hence, depending on the shock realizations, investors may choose to default. However, counterparty defaults are damaging and investors have the option to buy default insurances against this damage. We show that in this model, equilibrium networks consist of complete components of a certain size, which maximize the expected utility of investors in that component. For a wide variety of parameters, it turns out that investors choose not to buy any insurance at the equilibrium.
Open Access
A new approach to age and risk taking behavior of agents
(2012) Kozan, Zeynep
In this thesis, we use evolutionary game theory techniques to analyze the relation between risk taking behavior of agents and their ages. We suppose that risk aversion is the stable pattern for the old agents and risk seeking is the stable pattern for the young agents as it is commonly assumed so in economics literature. First, we solve a benchmark model without heterogeneity in terms of age di§erentiations. In such a case, we observe that mutation either increases or decreases with respect to the payo§ levels, depending on the initial Ötness levels of the population groups. In the second step, we introduce heterogeneous population frontier. The anticipated level of the initial mutant proportion provides incentives to triger the evolution. Then, we analyze numerically the e§ects of the initial level of Ötness, initial risk averse and risk seeking proportions on the pattern of the evolution process. Finally, we studied the intertemporal e§ects of di§erent risk averse and risk seeking population proportions on mutation.