Evolutionary Selection of Socially Sensitive Preferences in Random Matching Environments

In this paper we study the evolutionary selection of socially sensitive preferences in the context of reference interaction settings such as coordination failure and cooperation. We refer to a specific class of socially sensitive preferences in which players weigh additively their own material payoff against the opponent with either a positive or negative coefficient (λ-players). Preference evolution is guided by replicator dynamics in a context of perfect observability of preferences types and stochastic pairwise matching. We take an indirect evolutionary approach, that is, the selection mechanism operates on the actual material payoffs earned by players, so that any instance of socially sensitive preference can be thought of as instrumentally maintained. We find that the evolutionary viability of socially sensitive preferences basically depends on whether or not they cause a substantial improvement in the achievement of socially efficient outcomes with respect to the case where only self-serving or unconditionally focused preference orientations are observed. Our results suggest that moderate pro-social preference orientations are likely to emerge from social selection even in the absence of an intrinsic motivational drive, whereas extremely pro-social orientations as well as competitive and anti-social ones may need a stronger motivational base.     

Do investors like to diversify? A study of Markowitz preferences

We study rankings of completely and partially diversified portfolios and also of specialized assets when investors follow so-called Markowitz preferences. It turns out that diversification strategies for Markowitz investors are more complex than in the case of risk-averse and risk-inclined investors, whose investment strategies have been extensively investigated in the literature. In particular, we observe that for Markowitz investors, preferences toward risk vary depending on their sensitivities toward gains and losses. For example, it turns out that, unlike in the case of risk-averse and risk-inclined investors, Markowitz investors might prefer investing their entire wealth in just one asset. This finding helps us to better understand some financial anomalies and puzzles, such as the well known diversification puzzle, which notes that some investors tend to concentrate on investing in only a few assets instead of choosing the seemingly more attractive complete diversification.     

Further results on concordance relations

The purpose of this note is to sharpen the results in an earlier paper [Bouyssou, D., Pirlot, M., 2005. A characterization of concordance relations. European Journal of Operational Research 167 (2), 427–443] giving an axiomatic characterization of concordance relations. We show how the conditions used in this earlier paper can be weakened so as to become independent from the conditions needed to characterize a general conjoint measurement model tolerating intransitive and/or incomplete relations. This leads to a clearer characterization of concordance relations within this general model.     

An Asset Liability Management Model for Casualty Insurers: Complexity Reduction vs. Parameterized Decision Rules

In this paper we study possibilities for complexity reductions in large scale stochastic programming problems with specific reference to the asset liability management (ALM) problem for casualty insurers. We describe a dynamic, stochastic portfolio selection model, within which the casualty insurer maximizes a concave objective function, indicating that the company perceives itself as risk averse. In this context we examine the sensitivity of the solution to the quality and accuracy with which economic uncertainties are represented in the model. We demonstrate a solution method that combines two solution approaches: A truly stochastic, dynamic solution method that requires scenario aggregation, and a solution method based on ex ante decision rules, that allow for a greater number of scenarios. This dynamic/fix mix decision policy, which facilitates a huge number of outcomes, is then compared to a fully dynamic decision policy, requiring fewer outcomes. We present results from solving the model. Basically we find that the insurance company is likely to prefer accurate representation of uncertainties. In order to accomplish this, it will accept to calculate its current portfolio using parameterized decision rules.     

Dominant strategies and restricted ballots with variable electorate

This paper considers dominant (uniformly best) voting strategies in a variable-electorate model for social choice with restricted ballot sets. A voter can have any weak preference order on the alternatives. A voter who partitions the alternatives into three or more indifference classes never has a dominant strategy. The paper specifies conditions on a social choice function that are necessary and sufficient for a voter who partitions the alternatives into two indifference classes to have a dominant strategy.     

The structure of social decision functions

This paper investigates possible extensions of the Arrow Impossibility Theorem by relaxing the collective rationality condition from transitivity to acyclicity. It is shown that some elements of dictatorship must persist even when two of Arrow's conditions are dropped (namely the Pareto principle and transitivity of social preferences).     

Asymmetric probabilistic prospects of Stackelberg players

Alkanet al. (Ref. 1) consider the family of all bimatrix games with ordinal payoffs and conclude that the average leader and follower enjoy symmetric prospects under the Stackelberg solution concept. In contrast, economics lore stresses the asymmetry between leader and follower, the leader generally enjoying the more favored position. We replace the computational analysis of Ref. 1 by a simple probabilistic combinatorial argument. We then impose monotonicity conditions on the player preferences. With this regularity condition, the symmetry between leader and follower breaks down, and most of the resultant advantage accrues to the leader. Thus, the monotonicity largely restores the advantage ascribed by economics folklore to the leader. Our analysis extends to nonordinal payoff matrices.This work was supported by National Science Foundation Grant No. ECS-84-51032.The author thanks A. Alkan for showing him the interesting paradox. He thanks B. Foley, S. Hackman, and K. Calvin for helpful comments. The referee's remarks and suggestions, which improved the paper, are also appreciated.     

Eigenweight vectors and least-distance approximation for revealed preference in pairwise weight ratios

A new eigenweight vector is derived for the data of pairwise weight ratios. The well-known eigenweight vector derived by Saaty is then compared and contrasted in the light of least-distance approximation models. It is shown that the new eigenweight vector commands advantages over Saaty's, including less rigid assumptions on the error terms, robustness of solution, in addition to the fact that the new eigenweight vector can be computed very easily. The reader can construct other types of eigenweight vectors and least-distance approximation models using the framework of this article.Dedicated to G. Leitmann     

Single-peaked orders on a tree

Inada (1969) and Sen and Pattanaik (1969) have characterized the sets of preference orders which ensure the transitivity of the strict majority rule, no matter how each voter selects his own order in the set. But a problem remains untouched: which domains of orders guarantee the existence of a majority winner without necessarily ensuring the transitivity of the strict majority rule. We provide in this paper domains, called sets of single-peaked linear orders on a tree, which enjoy such a property. They appear as a generalization of the well-known sets of single-peaked linear orders.     

Conformational preferences in methylsilane and disilane. A quantitative non-empirical analysis of the importance of the hyperconjugative interactions

We have investigated the importance of the hyperconjugative interactions in determining the conformational preferences in methylsilane and disilane, and for comparative purposes also in ethane, using a procedure that provides quantitative information about the energy effects associated with orbital interactions. It is found that (1) these interactions are in all cases destabilizing and less destabilizing in the staggered conformation and that (2) in the absence of these interactions, in ethane the staggered conformer is still more stable, while in methylsilane and disilane the eclipsed conformer becomes more stable.We have also investigated the effects of each type of orbital interaction in terms of a quantitative perturbational analysis.