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3858. RATIONAL REACTION TO IRRATIONAL BEHAVIOR
Invited abstract in session WA-63: Novel Optimization Models in Finance, stream OR in Banking, Finance and Insurance: New Tools for Risk Management.
Wednesday, 8:30-10:00Room: S14 (building: 101)
Authors (first author is the speaker)
| 1. | Jorgen-Vitting Andersen
|
| CNRS |
Abstract
We study the problem where a population has to determine the truthfulness to certain commonly shared information. Problematics like this seems particular relevant in the current often tense political climate where spreading of false news repeatedly is at the center of accusation across the political aisle. To this aim we introduce a prototype model by considering “an index-of-truth” (IoT) and two types of agents: i) a percentage rho of rational agents, and ii) 1-rho of irrational agents. i) the rational agents use rational expectation in their decision making whether to believe in the given level of an IoT. By X we denote the uncertainty in the information used by the agents. If through rational expectations such an agent believe the IoT is right no action is taken. On the other hand, if the agent disagrees, a decision is taking to signal that the level of IoT is wrong influencing the value of the IoT index in proportion to the number of agents that reacts. ii) agents that are irrational on the other hand don’t try to gauge the proper level of the IoT index, but rather try to position themselves in alignment of what they believe will be the future value of the IoT. The decision making of the irrational agents is also publically signaled and influence the IoT index in proportion to the number of agents that react We present an analytical expression showing how the range of the IoT index depends on rho and X.
Keywords
- Agent Systems
- Behavioural OR
- Complex Societal Problems
Status: accepted
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