 APPLYING GAME THEORY IN RISK MANAGEMENTEnicov Igor ()
Annals of Faculty of Economics, 2016, vol. 1, issue 2, 283-291 Abstract: This article is devoted to analysis methods of application of game theory in conflict situations or competition in the economy. There are examples of the use of game theory in the identification, sizing, analysis and risk management. There is described the defining concepts of game theory in terms of their application in risk management. It is shown how to use the decision theory in risk management, which is part of operational research and decision-making process, based on various mathematical models. The decision theory refers performing various actions, to achieve well-defined goals in uncertain circumstances and under risk situations. The quality of decision is subject to a complex set of preconditions, it’s seen determines by the quality of used information and held managerial skills and applied by decision makers. The Choice between different alternatives of optimal decision is based on economic calculations of rationality, but also filled with other criteria that are not necessarily related to the economy. It thus becomes important to establish a set of rules and criteria for evaluating the performance of decision. This article presents games against nature (economic circumstances will be considered the nature). In the situations when a player (trader) wants to make an investment or a decision on an economic business etc., which conflicts with nature (incidentally nature of economic events), these decisions involve taking a certain risk and / or uncertainty regarding developments in the future. The player may reduce the risk of taking wrong decisions (for lack states of nature) by doing more experiences. This is however limited by the following circumstances: experiences requires time, in most cases, the decision must be made quickly and on the other hand, experiences involves expenditure which may be greater than the benefit brought by the excess of information that experiences provide. Thus, depending on the number of experiences that player decides to perform, in the article are analyzed: statistical inexperienced games; statistical games with unique experience; sequential statistical sampling Games; statistical sampling sequentially truncated. Games. Keywords: risk; risk management; game theory; decision theory; statistical games (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2016:i:2:p:283-291 Access Statistics for this article More articles in Annals of Faculty of Economics from University of Oradea, Faculty of Economics Contact information at EDIRC. |
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