Tag: Game Theory
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Information Asymmetry
Information asymmetry is when one group knows more than another during a deal or interaction, which can tilt the balance of power. This can lead to unfair transactions, market issues, and power imbalances in areas such as finance, health, politics, and education, impacting decision-making and overall fairness.
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Rent-Seeking
Rent-seeking is when someone tries to get a larger slice of the wealth pie, instead of making the pie bigger. It can lead to unfair advantages and slow economic growth. It’s hard to distinguish from normal business, impacts innovation, and can create income inequality, especially in countries with weak governance.
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Exploitative Interactions
In exploitative interactions, one party derives a benefit at the expense of another. These interactions are prevalent in ecological, economic, and social systems, and are influenced by principles of sustainability and evolutionary dynamics.
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Moral Hazard
Moral hazard refers to situations where a party takes on riskier behavior because they’re shielded from the consequences. It often occurs in insurance, finance, and healthcare, potentially leading to market inefficiencies and higher costs. Strategies exist to mitigate it.
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Principal-Agent Problem
The Principal-Agent Problem occurs when a person (the principal) hires someone else (the agent) to act for them, but the agent may not always act in the principal’s best interest due to differing information or motives. Solutions involve creating better incentives and transparency.
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Decision Tree
A Decision Tree is a graphical tool used to map complex decision-making processes, showcasing different paths and their outcomes. It’s useful for handling uncertainty, risk analysis, and sequential decisions, but can be complicated or misleading if not used properly.
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Preference Falsification
Preference falsification refers to individuals hiding their true preferences due to societal pressures. This phenomenon can distort perceived norms, influence behavior, and potentially lead to sudden societal shifts. Its impact spans policy making, democratic processes, and economic behavior.
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Interference Competition
Interference competition is a direct struggle between individuals or species for limited resources, often resulting in aggressive behavior or dominance hierarchies. It influences survival, reproductive success, species communities, and can drive evolutionary changes.