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Arbitrage and Rational Decisions by Robert Nau is a nonfiction available to read on EtoBox.

What is Arbitrage and Rational Decisions about?

This unique book offers a new approach to the modeling of rational decision-making under conditions of uncertainty and strategic and competition interactions among agents. It presents a unified theory in which the most basic axiom of rationality is the principle of no-arbitrage, namely that neither an individual decision maker nor a small group of strategic competitors nor a large group of market participants should behave in such a way as to provide a riskless profit opportunity to an outside observer.Both those who work in the finance area and those who work in decision theory more broadly will be interested to find that basic tools from finance (arbitrage pricing and risk-neutral probabilities) have broader applications, including the modeling of subjective probability and expected utility, incomplete preferences, inseparable probabilities and utilities, nonexpected utility, ambiguity, noncooperative games, and social choice. Key results in all these areas can be derived from a single principle and essentially the same mathematics.A number of insights emerge from this approach. One is that the presence of money (or not) is hugely important for modeling decision behavior in quant

Who reads Arbitrage and Rational Decisions?

Author

Robert Nau

Publisher

Chapman and Hall/CRC

Published

2025

Language

EN

ISBN

9781032859095

Category

nonfiction

Subjects

Economics, Finance, Business