Risk and Evolutionary Game Theory

Exploring risk-weighted expected utility through game-theoretic simulations

This project explores the concept of “risk-weighted expected utility,” developed in Lara Buchak’s earlier work, through game-theoretic simulations. Risk-weighted expected utility is a mathematical theory accounting for the idea that individuals can be rational while being either risk-avoidant or risk-inclined; the theory thus challenges the orthodox idea that rational individuals necessarily maximize expected utility. To test the theory, Buchak and CDH collaborators plans to develop code for two simulations: one based on Skyrm’s “Divide the Dollar” simulation, which will examine the relationship between risk-avoidance and fairness—more specifically, whether risk-avoidant behavior causes people to prefer equal outcomes; and one that will engage with shifts in risk attitudes. Not only will the simulations shed light on Buchak’s theory; but her project promises to illuminate risk-inclined and risk-avoidant behavior in real-life scenarios. For instance, the simulations might help us to think about how to promote or discourage risk-avoidant or risk-inclined behavior in society.  

CDH Grant History

  • 2022–2023 Research Partnership