Insurance companies invest their wealth in financial markets. The wealth evolution strongly depends on the success of their investment strategies, but also on liquidity shocks which occur during unfavourable years, when indemnities to be paid to thenclients exceed collected premia. An investment strategy that does not take liquidity shocks into account, exposes insurance companies to the risk of bankruptcy, when liquidity shocks and low investment payoffs jointly appear. Therefore, regulatory authorities impose solvency restrictions to ensure that insurance companies are able tonface their obligations with high probability. This paper analyses the behaviour of insurance companies in an evolutionary framework. We show that an insurance company that merely satisfies regulatory constraints will eventually vanish from the market. We give a more restrictive no bankruptcy condition for the investment strategies and we characterize trading strategies that are evolutionary stable, i.e. able to drive out any mutation.
"This paper discusses a novel approach to elicit people’s preferences fornpublic goods, namely the life satisfaction approach. Reported subjective well-beingndata are used to directly evaluate utility consequences of public goods. The strengthsnof this approach are compared to traditional approaches and identification issues arenaddressed. Moreover, it is applied to estimate utility losses caused by terroristnactivities in France, the UK and the Republic of Ireland. Terrorism in these countriesndepresses life satisfaction in a sizeable and robust way. However, the calculation ofnthe trade-off between terrorism and income requires improved measurement of thenmarginal utility of income."
"The 1-shot alpha-beauty contest is a non-equilibrium strategic game under bounded rationality conditions, while equilibrium is approached if the game is played iteratively sufficientlynmany times. Experimental data of the 1-shot setting of the 0-equilibrium game show a common pattern: The spectrum of announced numbers is a superposition of a skew backgroundndistribution and a regime of extra ordinarily often chosen numbers. Our model is capable ofnquantitatively reproducing this observation in non-equilibrium as well as the convergence to-nwards equilibrium in the iterative setting. The approach is based on two basic assumptions:n1.) Players iteratively update their recent guesses in the sense of eductive reasoning and 2.)nPlayers estimate intervals rather than exact numbers to cope with incomplete knowledge innnon-equilibrium. The width of the interval is regarded as a measure for the confidence ofnthe players' respective guess. It is shown analytically that the sequence of guessed numbers approaches a (finite) limit within only very few iterations. Moreover, if all playersnhave infinite confidence in their respective guesses, the asymptotic Winning Number equalsnthe rational Nash equilibrium 0, while if players have only finite confidence in their recentnguess, the Winning Number in the 1-shot setting is strictly larger than 0. Our model is alsoncapable of quantitatively describing the ""path into equilibrium"". Convergence is shown tonbe polynomial in the number of rounds played. The predictions of our model are in goodnquantitative agreement with real data for various alpha-beauty contest games.n "
"Consider a society where all agents initially play fair"" and one agentninvents a cheating"" strategy such as doping in sports. Which factorsndetermine the success of the new cheating strategy? In order to studynthis question we consider an evolutionary game with heterogenous agentsnwho can either play fair or cheat. We model heterogeneity by assumingnthat the players are either high or low types. Three factors determinenthe imitation dynamics of the model: the location and the type of theninnovator, the distribution of types, and the information available to thenagents. In particular we *nd that the economy is more likely to end up inna state where all agents cheat if the innovator is of low type or when thenagents are maximally segregated."
This paper tests the effect of a matching mechanism on donations in a controlled fieldnexperiment. We match the donations of students at the University of Zurich who, each semester,nhave to decide whether they wish to contribute to two Social Funds. Our results support thenhypothesis that a matching mechanism increases contributions to a public good. However, theneffect depends on the extent to which the contributions are matched. Whereas a 25 percentnincrease of a donation does not increase the willingness to contribute, a 50 percent increase doesnhave an effect. In addition, people need to be socially inclined to react to the matchingnmechanism. The field experiment provides some evidence suggesting that the matchingnmechanism crowds-out the intrinsic motivation of giving.
Volunteering constitutes one of the most important pro-social activities.nFollowing Adam Smith, helping others is the way to higher individual well-being. This viewncontrasts with the selfish utility maximizer who avoids costs from helping others. The twonrival views are studied empirically. We find robust evidence that volunteers are morensatisfied with their life than non-volunteers. Causality is addressed taking advantage of annatural experiment: the collapse of East Germany and its infrastructure of volunteering.nPeople who accidentally lost their opportunities for volunteering are compared to peoplenwho experienced no change in their volunteer status.
In a recent paper Engelmann and Strobl claim that a combination of a preference for efficiency and a Rawlsian motive for helping the least well-off is far more important than inequity aversion. Here we show that the relevance of the efficiency motive is largely restricted to students of economics and business administration. Students from other disciplines, adult academics from various disciplines and senior citizens value equality much higher than efficiency. Moreover, there is rather strong evidence that the relevance of the efficiency motive and the Rawlsian motive is largely restricted to non-strategic interactions.
In many occupations workers’ labor supply choices are constrained by institutionalnrules regulating labor time and effort provision. This renders explicit tests of the neoclassicalntheory of labor supply difficult. Here we present evidence from studies examining labornsupply responses in “neoclassical environments” in which workers are free to choose whennand how much to work. Despite the favorable environment the results cast doubt on thenneoclassical model. They are, however, consistent with a model of reference dependentnpreferences exhibiting loss aversion and diminishing sensitivity.
People spend more and more time commuting and often find it a burden.nAccording to economics, the burden of commuting is chosen when compensated eithernon the labor or on the housing market so that individuals' utility is equalized. However, inna direct test of this strong notion of equilibrium, we find that people with longerncommuting time report systematically lower subjective well-being. Additional empiricalnanalyses rule out institutional explanations of the empirical finding that commutersnsystematically incur losses. We discuss several possibilities of an extended model ofnhuman behavior able to explain this 'commuting paradox'.
This paper analyzes the causal relationships between marriage and subjective well-being in a longitudinal data set spanning 17 years. We find evidence that more happy singles opt more likely for marriage and that there are large differences in the benefits from marriage between couples. Potential, as well as actual, division of labor seems to contribute to spouses' well-being, especially for women and when there is a young family to raise. In contrast, large differences in the partners' educational level have a negative effect on experienced life satisfaction.
