On a Certain Method of Rejecting Games With Too Much Risk and Not Enough Expected Gain
AbstractMany important economic decisions involve an element of risk. Risk aversion is a concept in economics, game theory, finance, and psychology related to the behavior of consumers, players, and investors under uncertainty. Loss aversion is an important component of a phenomenon that has been widely discussed in recent years. It refers to a tendency to feel the pain of a loss more acutely than the pleasure of an equal-sized gain. Many scientists have analyzed the problem of profitability in games. Some aut hors presented certain features which characterize “safe” games played once. Kahneman and Tversky (1991) showed that the ratio of loss aversion to gain attraction should amount to 1:2. The aim of this paper is to show an asymptotically efficient strategy which enables the riskaverse player to establish boundary variables of loss and gain at each stage of a repeated game.
|Journal series||Economics World, ISSN 2328-7144, (0 pkt)|
|Keywords in English||asymptotically efficient adaptive allocation rule, one-armed bandit problem, risk aversion, repeated games|
|Score||= 5.0, 11-07-2019, ArticleFromJournal|
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