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Evolutionary Foundation of Preference for Locally Aggregate Risk

מאי 21, 2019 @ 12:00 pm - 1:00 pm

Title: Evolutionary Foundation of Preference for Locally Aggregate Risk
Speaker: Prof. Yuval Heller, Department of Economics, Bar-Ilan University
Date: 21/5/2019
Time: 12:00 – 13:00
Place: Building #3A, lower conference room, floor 2 (floor 1 in the elevator), Ariel University, Ariel
Abstract:

A few papers have studied how a growth rate of a population depends on interdependence of risk between agents in the population. Robson (1996, JET) shows in a discrete time setting that idiosyncratic risk induces a higher growth rate than aggregate risk. By contrast, Robatto & Szentes (2017, JET) shows in a continuous time setting that idiosyncratic risk induces the same growth rate as aggregate risk. The current paper helps to understand the contrast between the two results, and the contrast between the latter result and the strong intuition that aggregate risk has adverse effect on the growth rate. Specifically, we introduce a new source of risk in the continuous time setting, called locally aggregate risk, which is correlated between agents in the same location, but uncorrelated with agents in different locations. We show that this locally aggregate risk induces a strictly higher growth rate than both idiosyncratic risk and aggregate risk.

This is joint work with Arthur Robson.

Short bio:

Yuval is an associate professor in the Department of Economics in Bar Ilan. He finished his Ph.D. in Tel Aviv University (Mathematics) in 2011. He was a post-doc, and later an associate professor, in the department of economics at the University of Oxford. In 2016 he won a 5-year European Research Council starting grant to study the topic of evolutionary stability, observability, and efficiency in strategic interactions. Yuval has published so far 15 papers (mostly in economics journals).

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תאריך:
מאי 21, 2019
זמן:
12:00 pm - 1:00 pm
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