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Full-Text Articles in Physical Sciences and Mathematics
Why Top Experts Are Paid So Much: Economics-Based Explanation, Julio C. Urenda, Vladik Kreinovich
Why Top Experts Are Paid So Much: Economics-Based Explanation, Julio C. Urenda, Vladik Kreinovich
Departmental Technical Reports (CS)
At first glance, it seems that people should be paid in proportion to their contribution, so if one person produces a little more than the other one, he/she should be paid a little more. In reality, however, top performers are paid dis-proportionally more than those whose performance is slightly worse. How can we explain this from an economic viewpoint? We show that actually there is no paradox here: a simple economic analysis shows that in many area, it makes perfect economic sense to pay much more to top performers.
Maximum Entropy Approach To Portfolio Optimization: Economic Justification Of An Intuitive Diversity Idea, Laxman Bokati, Vladik Kreinovich
Maximum Entropy Approach To Portfolio Optimization: Economic Justification Of An Intuitive Diversity Idea, Laxman Bokati, Vladik Kreinovich
Departmental Technical Reports (CS)
The traditional Markowitz approach to portfolio optimization assumes that we know the means, variances, and covariances of the return rates of all the financial instruments. In some practical situations, however, we do not have enough information to determine the variances and covariances, we only know the means. To provide a reasonable portfolio allocation for such cases, researchers proposed a heuristic maximum entropy approach. In this paper, we provide an economic justification for this heuristic idea.
Use Of Symmetries In Economics: An Overview, Vladik Kreinovich, Olga Kosheleva, Nguyen N. Thach, Nguyen Duc Trung
Use Of Symmetries In Economics: An Overview, Vladik Kreinovich, Olga Kosheleva, Nguyen N. Thach, Nguyen Duc Trung
Departmental Technical Reports (CS)
In this paper, we show that many semi-heuristic econometric formulas can be derived from the natural symmetry requirements. The list of such formulas includes many famous formulas provided by Nobel-prize winners, such as Hurwicz optimism-pessimism criterion for decision making under uncertainty, McFadden's formula for probabilistic decision making, Nash's formula for bargaining solution -- as well as Cobb-Douglas formula for production, gravity model for trade, etc.
Decision Making Under Uncertainty With Applications To Geosciences And Finance, Laxman Bokati
Decision Making Under Uncertainty With Applications To Geosciences And Finance, Laxman Bokati
Open Access Theses & Dissertations
In many practical situations, we need to make a decision. In engineering, we need to decide on the best design of a system, and, for existing systems â?? on the best control strategy. In financial applications, we need to decide what is the best way to invest money. In geosciences, we need to decide whether we should explore a possible mineral deposit â?? or whether we should perform more experiments and measurements (and what exactly). In some cases, we can compute the exact consequences of each decision - e.g., if we are controlling a satellite. However, in many other cases, …