Real options and game theoretical approaches to real estate development projects: multiple equilibria and the implications of different tie-breaking rules

This paper contributes to a fast growing literature which introduces game theory in the analysis of real option investments in a competitive setting. Specifically, in this paper we focus on the issue of multiple equilibria and on the implications that different equilibrium selections may have for the pricing of real options and for subsequent strategic decisions. We present some theoretical results of the necessary conditions to have multiple equilibria and we show under which conditions different tie-breaking rules result in different economic decisions. We then present a numerical exercise using the in formation set obtained on a real estate development in South London. We find that risk aversion reduces option value and this reduction decreases marginally as negative externalities decrease.

The LDC debt problem: a game-theoretical analisys

We review the LDC debt crisis since 1982, by means of game theory. New insights are obtained into the reasons behind the formation of the creditors' carte1 and the nature of the difficu1ties invo1ved in the formation of the debtors' carte1. The standard view that Rubinstein's barganing mode1s are appropriate for dea1ing with debt re1ief is shown to be faulty, un1ess the debtor buys out the debt.

Ensaio sobre o agente racional: esparadrapos para um paciente terminal?

The Rational Agent model have been a foundational basis for theoretical models such as Economics, Management Science, Artificial Intelligence and Game Theory, mainly by the ¿maximization under constraints¿ principle, e.g. the ¿Expected Utility Models¿, among them, the Subjective Expected Utility (SEU) Theory, from Savage, placed as most influence player over theoretical models we¿ve seen nowadays, even though many other developments have been done, indeed also in non-expected utility theories field. Having the ¿full rationality¿ assumption, going for a less idealistic sight ¿bounded rationality¿ of Simon, or for classical anomalies studies, such as the ¿heuristics and bias¿ analysis by Kahneman e Tversky, ¿Prospect Theory¿ also by Kahneman & Tversky, or Thaler¿s Anomalies, and many others, what we can see now is that Rational Agent Model is a ¿Management by Exceptions¿ example, as for each new anomalies¿s presentation, in sequence, a ¿problem solving¿ development is needed. This work is a theoretical essay, which tries to understand: 1) The rational model as a ¿set of exceptions¿; 2) The actual situation unfeasibility, since once an anomalie is identified, we need it¿s specific solution developed, and since the number of anomalies increases every year, making strongly difficult to manage rational model; 3) That behaviors judged as ¿irrationals¿ or deviated, by the Rational Model, are truly not; 4) That¿s the right moment to emerge a Theory including mental processes used in decision making; and 5) The presentation of an alternative model, based on some cognitive and experimental psychology analysis, such as conscious and uncounscious processes, cognition, intuition, analogy-making, abstract roles, and others. Finally, we present conclusions and future research, that claims for deeper studies in this work¿s themes, for mathematical modelling, and studies about a rational analysis and cognitive models possible integration. .

Terapia ocupacional em ação interdisciplinar: jogos educativo-nutricionais na prevenção da obesidade infantil

The inter-subjectivity is the answer in the search for the solution of complex problems, which concerns interfaces of knowledge, respecting their borders. This paradigm is essential in the author's work. So, the search on screen is based on this perspective, by using inter-subject groups of work conduced by professionals of Computer Science, Social Communication, Architecture and Urbanism, Pedagogy, Psicopegagogy, Nutritional Science, Endocrinology, Occupational Therapy and Nursing, it was also part of this group an 8 year old child, daughter of one of the professional who took part of the group. This thesis aims to present the course of investigation developed, analyzing the action of inter-subject Occupational Therapy and Nutrition on the promotion of learning nutritional concepts through educative-nutritional games in order to prevent child's obesity in an educative context. The research was analytic, interventionist and almost experimental. It took place in a public school in Fortaleza, Ceará, Brazil, between August and December 2004. It was selected a sample non-probabilistic, by convenience, of 200 children, born from 1994 to 1996. It was selected almost nonprobabilistically, by convenience, 200 children born between 1994 and 1996. To analyze the results it was used a triangulation, associated by quantitative and qualitative approaches. The basis collect happened through games specially manufactured to these research- video-games, board games, memory games, puzzles, scramble, searching words and iterative basics. There were semi-structured interviews, direct and structured observations and focus in-groups. It was noticed the efficiency of educativenutritional games in the learning process, which lead to a changing of attitude towards the eating choices. These games gave similar results in relation to the compared variations preferences, experience and attitudes, theses attitudes were observed through the game; and the categories to compare the possibility of learning by playing, the fantasy in the learning process, learning concepts of nutritional education and the need of help in the learning process (mediation). It was proved that educativenutritional games could be used to teach nutritional concepts, in an inter-subjective action of Occupational Therapy and Nutrition in schools. The simultaneous application of these games lead to the optimization of child s learning process. It should be emphasized the need of studies about the adaptation of tools used in a child s Nutritional Education, with the help of inter-subjective action. Because just one subject, in a fractionated way can give an answer to complex problems and help to a change of the reality with effectiveness and resolution

Structural enrichment reduces aggression in Tilapia rendalli

Environmental enrichment seeks to improve the behavior of captive animals. Few studies have developed enrichment strategies for fish, particularly for use in aquaculture. Environmental enrichment for territorial and aggressive animals has the potential to increase both the amount of defensible resources and the value of a disputed territory which can increase the level of aggression. This study evaluated this hypothesis for the redbreast tilapia, Tilapia rendaIli. We used a short-term approach for evaluation of fish aggressive behavior by recording it for 30 min after introduction of a pair of fish into each experimental aquarium. Our main finding was that the latency to start a fight was lower in an enriched environment, but the frequency of attacks was higher in a non-enriched environment (control). Furthermore, we observed clear hierarchical behavior (submissive dark stripes on the body and dominant light-colored bodies without stripes) only in the non-enriched environment. Structural enrichment of the environment for redbreast tilapia leads to decreased aggression and cohabitation without hierarchical dominance. © 2013 Copyright Taylor and Francis Group, LLC.

Variable assessment of wing colouration in aerial contests of the red-winged damselfly Mnesarete pudica (Zygoptera, Calopterygidae)

Wing pigmentation is a trait that predicts the outcome of male contests in some damselflies. Thus, it is reasonable to suppose that males would have the ability to assess wing pigmentation and adjust investment in a fight according to the costs that the rival may potentially impose. Males of the damselfly Mnesarete pudica exhibit red-coloured wings and complex courtship behaviour and engage in striking male– male fights. In this study, we investigated male assessment behaviour during aerial contests. Theory suggests that the relationship between male resource-holding potential (RHP) and contest duration describes the kind of assessment adopted by males: self-assessment, opponent-only assessment or mutual assessment. A recent theory also suggests that weak and strong males exhibit variations in the assessment strategies adopted. We estimated male RHP through male body size and wing colouration (i.e. pigmentation, wing reflectance spectra and transmission spectra) and studied the relationship between male RHP and contest duration from videodocumented behavioural observations of naturally occurring individual contests in the field. The results showed that males with more opaque wings and larger red spots were more likely to win contests. The relationships between RHP and contest durations partly supported the self-assessment and the mutual assessment models. We then experimentally augmented the pigmented area of the wings, in order to evaluate whether strong and weak males assess rivals’ RHP through wing pigmentation. Our experimental manipulation, however, clearly demonstrated that strong males assess rivals’ wing pigmentation. We finally suggest that there is a variation in the assessment strategy adopted by males

Variable assessment of wing colouration in aerial contests of the red-winged damselfly Mnesarete pudica (Zygoptera, Calopterygidae)

Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES)

NASH game and mixed H2/H∞ control

In this work a Nonzero-Sum NASH game related to the H2 and H∞ control problems is formulated in the context of convex optimization theory. The variables of the game are limiting bounds for the H2 and H∞ norms, and the final controller is obtained as an equilibrium solution, which minimizes the `sensitivity of each norm' with respect to the other. The state feedback problem is considered and illustrated by numerical examples.

A further note on the college admission game

When a stable matching rule is used for a college admission market, questions on incentives facing agents of both sides of the market naturally emerge. This note states and proves four important results which fill a gap in the theory of incentives for the college admission model. Two of them have never been demonstrated but have been used along the years and are responsible for the success that this theory has had in explaining empirical economic phenomena.

Can the neuroeconomics revolution revolutionize psychiatry?

Neuroeconomics is a rapidly growing new research discipline aimed at describing the neural substrate of decision-making using incentivized decisions introduced in experimental economics. The novel combination of economic decision theory and neuroscience has the potential to better examine the interactions of social, psychological and neural factors with regard to motivational forces that may underlie psychiatric problems. Game theory will provide psychiatry with computationally principled measures of cognitive dysfunction. Given the relatively high heritability of these measures, they may contribute to improving phenotypic definitions of psychiatric conditions. The game-theoretical concepts of optimal behavior will allow description of psychopathology as deviation from optimal functioning. Neuroeconomists have successfully used normative or near-normative models to interpret the function of neurotransmitters; these models have the potential to significantly improve neurotransmitter theories of psychiatric disorders. This paper will review recent evidence from neuroeconomics and psychiatry in support of applying economic concepts such as risk/uncertainty preference, time preference and social preference to psychiatric research to improve diagnostic classification, prevention and therapy.

Compensation, Incentives and Risk: Economic Theory and Russian Practise

Mr. Pechersky set out to examine a specific feature of the employer-employee relationship in Russian business organisations. He wanted to study to what extent the so-called "moral hazard" is being solved (if it is being solved at all), whether there is a relationship between pay and performance, and whether there is a correlation between economic theory and Russian reality. Finally, he set out to construct a model of the Russian economy that better reflects the way it actually functions than do certain other well-known models (for example models of incentive compensation, the Shapiro-Stiglitz model etc.). His report was presented to the RSS in the form of a series of manuscripts in English and Russian, and on disc, with many tables and graphs. He begins by pointing out the different examples of randomness that exist in the relationship between employee and employer. Firstly, results are frequently affected by circumstances outside the employee's control that have nothing to do with how intelligently, honestly, and diligently the employee has worked. When rewards are based on results, uncontrollable randomness in the employee's output induces randomness in their incomes. A second source of randomness involves the outside events that are beyond the control of the employee that may affect his or her ability to perform as contracted. A third source of randomness arises when the performance itself (rather than the result) is measured, and the performance evaluation procedures include random or subjective elements. Mr. Pechersky's study shows that in Russia the third source of randomness plays an important role. Moreover, he points out that employer-employee relationships in Russia are sometimes opposite to those in the West. Drawing on game theory, he characterises the Western system as follows. The two players are the principal and the agent, who are usually representative individuals. The principal hires an agent to perform a task, and the agent acquires an information advantage concerning his actions or the outside world at some point in the game, i.e. it is assumed that the employee is better informed. In Russia, on the other hand, incentive contracts are typically negotiated in situations in which the employer has the information advantage concerning outcome. Mr. Pechersky schematises it thus. Compensation (the wage) is W and consists of a base amount, plus a portion that varies with the outcome, x. So W = a + bx, where b is used to measure the intensity of the incentives provided to the employee. This means that one contract will be said to provide stronger incentives than another if it specifies a higher value for b. This is the incentive contract as it operates in the West. The key feature distinguishing the Russian example is that x is observed by the employer but is not observed by the employee. So the employer promises to pay in accordance with an incentive scheme, but since the outcome is not observable by the employee the contract cannot be enforced, and the question arises: is there any incentive for the employer to fulfil his or her promises? Mr. Pechersky considers two simple models of employer-employee relationships displaying the above type of information symmetry. In a static framework the obtained result is somewhat surprising: at the Nash equilibrium the employer pays nothing, even though his objective function contains a quadratic term reflecting negative consequences for the employer if the actual level of compensation deviates from the expectations of the employee. This can lead, for example, to labour turnover, or the expenses resulting from a bad reputation. In a dynamic framework, the conclusion can be formulated as follows: the higher the discount factor, the higher the incentive for the employer to be honest in his/her relationships with the employee. If the discount factor is taken to be a parameter reflecting the degree of (un)certainty (the higher the degree of uncertainty is, the lower is the discount factor), we can conclude that the answer to the formulated question depends on the stability of the political, social and economic situation in a country. Mr. Pechersky believes that the strength of a market system with private property lies not just in its providing the information needed to compute an efficient allocation of resources in an efficient manner. At least equally important is the manner in which it accepts individually self-interested behaviour, but then channels this behaviour in desired directions. People do not have to be cajoled, artificially induced, or forced to do their parts in a well-functioning market system. Instead, they are simply left to pursue their own objectives as they see fit. Under the right circumstances, people are led by Adam Smith's "invisible hand" of impersonal market forces to take the actions needed to achieve an efficient, co-ordinated pattern of choices. The problem is that, as Mr. Pechersky sees it, there is no reason to believe that the circumstances in Russia are right, and the invisible hand is doing its work properly. Political instability, social tension and other circumstances prevent it from doing so. Mr. Pechersky believes that the discount factor plays a crucial role in employer-employee relationships. Such relationships can be considered satisfactory from a normative point of view, only in those cases where the discount factor is sufficiently large. Unfortunately, in modern Russia the evidence points to the typical discount factor being relatively small. This fact can be explained as a manifestation of aversion to risk of economic agents. Mr. Pechersky hopes that when political stabilisation occurs, the discount factors of economic agents will increase, and the agent's behaviour will be explicable in terms of more traditional models.

The Making of Optimal and Consistent Policy: An Implementation Theory Framework for Monetary Policy

This paper shows that optimal policy and consistent policy outcomes require the use of control-theory and game-theory solution techniques. While optimal policy and consistent policy often produce different outcomes even in a one-period model, we analyze consistent policy and its outcome in a simple model, finding that the cause of the inconsistency with optimal policy traces to inconsistent targets in the social loss function. As a result, the social loss function cannot serve as a direct loss function for the central bank. Accordingly, we employ implementation theory to design a central bank loss function (mechanism design) with consistent targets, while the social loss function serves as a social welfare criterion. That is, with the correct mechanism design for the central bank loss function, optimal policy and consistent policy become identical. In other words, optimal policy proves implementable (consistent).

Financial Policies and Dynamic Game Simulation in Poland and Hungary

Recently, steady economic growth rates have been kept in Poland and Hungary. Money supplies are growing rather rapidly in these economies. In large, exchange rates have trends of depreciation. Then, exports and prices show the steady growth rates. It can be thought that per capita GDPs are in the same level and development stages are similar in these two countries. It is assumed that these two economies have the same export market and export goods are competing in it. If one country has an expansion of monetary policy, price increase and interest rate decrease. Then, exchange rate decrease. Exports and GDP will increase through this phenomenon. At the same time, this expanded monetary policy affects another country through the trade. This mutual relationship between two countries can be expressed by the Nash-equilibrium in the Game theory. In this paper, macro-econometric models of Polish and Hungarian economies are built and the Nash- equilibrium is introduced into them.