Yesterday, news broke that the SEC is accusing Goldman-Sachs of exploiting its middleman position for fraudulent purposes. This case is a striking example of what failures the relational or network structure of the global economy can cause without proper regulation and governance. In fact, this case has several important implications for our understanding of the global economy.
Author: Robert Gilles
New page on game theory and applications
I just added a new page to this web site with recent working papers on game theory and its applications. I posted two papers, one with Dimitrios Diamantaras on using ambiguity equilibrium concepts to understand social opinion formation and one with Zhengzheng Pan on a dynamic, boundedly rational learning process in a setting where interaction…
New page on network formation
I have added a new page on my research on network formation. Two papers are currently posted there. First, a paper with Sudipta Sarangi on the modeling of trust in network formation. Second, an unpublished working paper from 2000 on evolutionary formation of interaction if players play a simple game in a spatial setting.
Trust in networks
Recently there has been a small surge in the economics literature addressing the role of trust in the economy. Experiments have shown that trust is extremely important for understanding economic processes. Trust does not fit very well with the traditional concept of “homo economicus”: Rational behavior is not trusting. The building and confirmation of trust…
Limitations of behavioral economics
Over the past months during the current economic recession and financial crisis, there has developed a published opinion as if so-called behavioral economics could explain the crisis. Behavioral economics emanates from observations in economic and game theoretic experiments that human subjects do not behave rationally, but are clearly bounded in their reasoning about decisions. Subjects…