The Experts below are selected from a list of 360 Experts worldwide ranked by ideXlab platform
Andrew W Lo - One of the best experts on this subject based on the ideXlab platform.
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the origin of risk aversion
Proceedings of the National Academy of Sciences of the United States of America, 2014Co-Authors: Ruixun Zhang, Thomas J Brennan, Andrew W LoAbstract:Risk aversion is one of the most basic assumptions of economic behavior, but few studies have addressed the question of where risk preferences come from and why they differ from one individual to the next. Here, we propose an Evolutionary Explanation for the origin of risk aversion. In the context of a simple binary-choice model, we show that risk aversion emerges by natural selection if reproductive risk is systematic (i.e., correlated across individuals in a given generation). In contrast, risk neutrality emerges if reproductive risk is idiosyncratic (i.e., uncorrelated across each given generation). More generally, our framework implies that the degree of risk aversion is determined by the stochastic nature of reproductive rates, and we show that different statistical properties lead to different utility functions. The simplicity and generality of our model suggest that these implications are primitive and cut across species, physiology, and genetic origins.
Thorsten Hens - One of the best experts on this subject based on the ideXlab platform.
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An Evolutionary Explanation of the value premium puzzle
Journal of Evolutionary Economics, 2011Co-Authors: Thorsten Hens, Terje Lensberg, Klaus Reiner Schenk-hoppé, Peter WöhrmannAbstract:As early as 1934 Graham and Dodd conjectured that excess returns from value investment originate from a tendency of stock prices to converge towards a fundamental value. This paper confirms their insights within the Evolutionary finance model of Evstigneev et al. (Econ Theory 27:449–468, (Evstigneev et al. 2006 )). Our empirical results show the predictive power of the Evolutionary benchmark valuation for the relative market capitalization and its dynamics in the sample of firms listed in the Dow Jones Industrial Average index in 1981–2009.
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an Evolutionary Explanation of the value premium puzzle
Social Science Research Network, 2010Co-Authors: Thorsten Hens, Terje Lensberg, Klaus Reiner Schenkhoppe, Peter WoehrmannAbstract:As early as 1934 Graham and Dodd conjectured that excess returns from value investment originate from a tendency of stock prices to converge towards a fundamental value. This paper confirms their insights within the Evolutionary finance model of Evstigneev, Hens and Schenk-Hoppe (Economic Theory, 27, 449-468, 2006). Our empirical results show the predictive power of the Evolutionary benchmark valuation for the relative market capitalization and its dynamics in the sample of firms listed in the Dow Jones Industrial Average index in 1981-2009.
Stuart A West - One of the best experts on this subject based on the ideXlab platform.
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Evolutionary theory and the ultimate proximate distinction in the human behavioral sciences
Perspectives on Psychological Science, 2011Co-Authors: Thomas C Scottphillips, Thomas E Dickins, Stuart A WestAbstract:To properly understand behavior, we must obtain both ultimate and proximate Explanations. Put briefly, ultimate Explanations are concerned with why a behavior exists, and proximate Explanations are concerned with how it works. These two types of Explanation are complementary and the distinction is critical to Evolutionary Explanation. We are concerned that they have become conflated in some areas of the Evolutionary literature on human behavior. This article brings attention to these issues. We focus on three specific areas: the evolution of cooperation, transmitted culture, and epigenetics. We do this to avoid confusion and wasted effort-dangers that are particularly acute in interdisciplinary research. Throughout this article, we suggest ways in which misunderstanding may be avoided in the future.
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resistance to extreme strategies rather than prosocial preferences can explain human cooperation in public goods games
Proceedings of the National Academy of Sciences of the United States of America, 2010Co-Authors: Rolf Kummerli, Maxwell N Burtonchellew, Adin Rossgillespie, Stuart A WestAbstract:The results of numerous economic games suggest that humans behave more cooperatively than would be expected if they were maximizing selfish interests. It has been argued that this is because individuals gain satisfaction from the success of others, and that such prosocial preferences require a novel Evolutionary Explanation. However, in previous games, imperfect behavior would automatically lead to an increase in cooperation, making it impossible to decouple any form of mistake or error from prosocial cooperative decisions. Here we empirically test between these alternatives by decoupling imperfect behavior from prosocial preferences in modified versions of the public goods game, in which individuals would maximize their selfish gain by completely (100%) cooperating. We found that, although this led to higher levels of cooperation, it did not lead to full cooperation, and individuals still perceived their group mates as competitors. This is inconsistent with either selfish or prosocial preferences, suggesting that the most parsimonious Explanation is imperfect behavior triggered by psychological drives that can prevent both complete defection and complete cooperation. More generally, our results illustrate the caution that must be exercised when interpreting the Evolutionary implications of economic experiments, especially the absolute level of cooperation in a particular treatment.
Ruixun Zhang - One of the best experts on this subject based on the ideXlab platform.
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variety is the spice of life irrational behavior as adaptation to stochastic environments
Quarterly Journal of Finance, 2018Co-Authors: Thomas J Brennan, Ruixun ZhangAbstract:The debate between rational models of behavior and their systematic deviations, often referred to as “irrational behavior”, has attracted an enormous amount of research. Here, we reconcile the debate by proposing an Evolutionary Explanation for irrational behavior. In the context of a simple binary choice model, we show that irrational behaviors are necessary for evolution in stochastic environments. Furthermore, there is an optimal degree of irrationality in the population depending on the degree of environmental randomness. In this process, mutation provides the important link between rational and irrational behaviors, and hence the variety in evolution. Our results yield widespread implications for financial markets, corporate behavior, and disciplines beyond finance.
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the origin of risk aversion
Proceedings of the National Academy of Sciences of the United States of America, 2014Co-Authors: Ruixun Zhang, Thomas J Brennan, Andrew W LoAbstract:Risk aversion is one of the most basic assumptions of economic behavior, but few studies have addressed the question of where risk preferences come from and why they differ from one individual to the next. Here, we propose an Evolutionary Explanation for the origin of risk aversion. In the context of a simple binary-choice model, we show that risk aversion emerges by natural selection if reproductive risk is systematic (i.e., correlated across individuals in a given generation). In contrast, risk neutrality emerges if reproductive risk is idiosyncratic (i.e., uncorrelated across each given generation). More generally, our framework implies that the degree of risk aversion is determined by the stochastic nature of reproductive rates, and we show that different statistical properties lead to different utility functions. The simplicity and generality of our model suggest that these implications are primitive and cut across species, physiology, and genetic origins.
Binbin Chen - One of the best experts on this subject based on the ideXlab platform.
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Explanations for attractiveness related positive biases in an Evolutionary perspective of life history theory
Behavioral and Brain Sciences, 2017Co-Authors: Binbin ChenAbstract:The mating-related Evolutionary Explanation that Maestripieri et al. offer does not apply to (1) infants' positive biases toward attractive individuals and (2) adults' positive biases toward attractive infants and children. They are best understood when integrated into an Evolutionary life history framework. I argue that the life history of positive biases toward attractive individuals is driven by fundamental trade-offs made throughout development.
