We demonstrate by mathematical analysis and systematic computer simulations that redistribution can lead to sustainable growth in a society. In accordance with economic models of risky human capital, we assume that dynamics of human capital is modeled as a multiplicative stochastic process...

Game theory formalizes certain interactions between physical particles or between living beings in biology, sociology, and economics, and quantifies the outcomes by payoffs. The prisoner's dilemma (PD) describes situations in which it is profitable if everybody cooperates rather than defects...

This paper suggests a new explanation for the low level of annuitization, which is valid even if one assumes perfect markets. We show that, as soon there exists a positive bequest motive, sufficiently risk averse individuals should not purchase annuities. A model calibration accounting for...

We model the systemic risk associated with the so-called balance-sheet amplification mechanism in a system of banks with interlocked balance sheets and with positions in real-economy-related assets. Our modeling framework integrates a stochastic price dynamics with an active balance-sheet...

We study the evolution of networks when the creation and decay of links are based on the position of nodes in the network measured by their centrality. We show that the same network dynamics arises under various centrality measures, and solve analytically the network evolution. During the...

Current banking regulatory frameworks are based on the belief that refined assessment of credit risks improves banking stability. This paper investigates this claim in a general setting by comparing a simple banking system with a sophisticated banking system which is capable of assessing default...

``Disorder-induced volatility'' (DIV) describes the enhanced fluctuations of collective behaviors exhibited by bistable systems in the presence of a rapidly fluctuating external signal. At the DIV resonance, a defining characteristics is that the response of the system becomes uncorrelated with...

We consider a dynamic model of network formation where agents form and sever links based on the centrality of their potential partners. We show that the existence of capacity constrains in the amount of links an agent can maintain introduces a transition from dissortative to assortative...

Sustainability of communities, agriculture, and industry is strongly dependent on an effective storage and supply of water resources. In some regions the economic growth has led to a level of water demand which can only be accomplished through efficient reservoir networks. Such infrastructures...

We explore the dynamics of default cascades in a network of credit interlinkages in which each agent is at the same time a borrower and a lender. When some counterparties of an agent default, the loss she experiences amounts to her total exposure to those counterparties. A possible conjecture in...