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The problem of arising the Pareto inefficient norm in relations “investor – government” type

Author

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  • Sokolovskyi, Dmytro
  • Sokolovska, Olena

Abstract

The article deals with problem of forming of Pareto non-optimal norms of mutual behavior of investors and government in the process of decision-making related to financing of reduction of risks of investment activity in economy. The game-theoretical analysis suggests that inefficiency of arising norms is non-casual; it follows from the behavior of interactive parties. Empirical verification based on statistical data of OECD countries confirms in general the established conclusion.

Suggested Citation

  • Sokolovskyi, Dmytro & Sokolovska, Olena, 2013. "The problem of arising the Pareto inefficient norm in relations “investor – government” type," MPRA Paper 44745, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:44745
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    File URL: https://mpra.ub.uni-muenchen.de/44745/1/MPRA_paper_44745.pdf
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    References listed on IDEAS

    as
    1. Dennis Dittrich & Werner Guth & Boris Maciejovsky, 2005. "Overconfidence in investment decisions: An experimental approach," The European Journal of Finance, Taylor & Francis Journals, vol. 11(6), pages 471-491.
    2. Koralai Kirabaeva, 2011. "Adverse Selection and Financial Crises," Bank of Canada Review, Bank of Canada, vol. 2010(Winter), pages 11-19.
    3. Anand, Paul & Cowton, Christopher J., 1993. "The ethical investor: Exploring dimensions of investment behaviour," Journal of Economic Psychology, Elsevier, vol. 14(2), pages 377-385, June.
    4. Charness, Gary & Cobo-Reyes, Ramón & Jiménez, Natalia, 2008. "An investment game with third-party intervention," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 18-28, October.
    5. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    6. Giorgio Coricelli & Luis González Morales & Amelie Mahlstedt, 2006. "The Investment Game With Asymmetric Information," Metroeconomica, Wiley Blackwell, vol. 57(1), pages 13-30, February.
    7. Daniel, Kent & Hirshleifer, David & Teoh, Siew Hong, 2002. "Investor psychology in capital markets: evidence and policy implications," Journal of Monetary Economics, Elsevier, vol. 49(1), pages 139-209, January.
    8. Pflug, Georg Ch. & Pichler, Alois & Wozabal, David, 2012. "The 1/N investment strategy is optimal under high model ambiguity," Journal of Banking & Finance, Elsevier, vol. 36(2), pages 410-417.
    9. Jean Tirole, 2012. "Overcoming Adverse Selection: How Public Intervention Can Restore Market Functioning," American Economic Review, American Economic Association, vol. 102(1), pages 29-59, February.
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    More about this item

    Keywords

    investors; government; economic behavior; game theory; Nash equilibrium; Pareto-optimality;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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