Hedging of illiquid financial instruments is carried out with liquid instruments that, as a rule, have simpler payoff functions. For example, hedging of Asian or long-dated put options is carried out with vanilla puts, hedging of Bermuda swaptions is done with vanilla swaptions, etc. This kind...

Does cooperating require the inhibition of selfish urges? Or does “rational” self-interest constrain cooperative impulses? I investigated the role of intuition and deliberation in cooperation by meta-analyzing 67 studies in which cognitive-processing manipulations were applied to economic...

This note is a sketch of what could be the basis for a theory of applied statistics. Such a theory is needed to help statistics become more relevant, with significant impact and innovative developments. To achieve this goal, statisticians need to get involved in new activities within the...

In finance, decision making and choice requires that we assume that asset prices tend to trend. This assumption also logically enables us to construct exits to limit losses and protect capital. But investors have good reason to be uneasy regarding the potential for significant loss when using a...

Traditional portfolio optimization models specify placement of capital as rather irrevocably and fully at risk through investment horizon(s) or continuously. Under this constraint, asset class allocation typically serves as primary mode of diversification, pursuing risk moderation by seeking to...

This chapter reviews the theory of the voluntary public and private redistribution of wealth elaborated by economic analysis in the last forty years or so. The central object of the theory is altruistic gift-giving, construed as benevolent voluntary redistribution of income or wealth. The theory...

In 1959, Ragnar Frisch prompted Georg Rasch to formalise a separability theorem that continues today to serve as the basis of a wide range of theoretical and applied developments in psychological and social measurement. Previously unnoted are the influences on Rasch exerted by Frisch’s...

In 1979, the Danish mathematician Georg Rasch recounted a 1959 visit with his former teacher, and later economics Nobel Prize winner, Ragnar Frisch. At this time, Frisch prompted Rasch to formalize his work in a separability theorem. Previously unnoted is that Frisch's close colleague, Irving...

Economic development disparities are caused mainly by unjustified biased policies and not in actual fact biased policies. Balanced policies are often recommended for balanced growth of all economic sectors. However, through sector linkages, and due to lack of funding in many developing nations,...

This paper argues that currently advanced, aging economies experienced a qualitative change in the role of public education during the process of industrialization. In the early phases of the Industrial Revolution, public education was regarded as a duty that regulated child labor and thereby...