IDEAS home Printed from https://ideas.repec.org/a/taf/tjorxx/v69y2018i5p645-660.html
   My bibliography  Save this article

The effect of risk aversion on the outcomes of inspection games

Author

Listed:
  • Yael Deutsch
  • Boaz Golany

Abstract

In this work, we study how risk aversion behavior affects the final outcomes of inspection games. We formulate two nonzero-sum parametric games between an inspector and an agent, which are distinguished by the players’ risk behaviors: risk aversion or risk neutrality. Both games are solved efficiently, and closed-form equilibria solutions are provided. The solutions of the two games are compared with each other and with a third game where both players are risk neutral. Analysis of the results reveals that the risk aversion of the agent has a stronger effect than that of the inspector, since the equilibrium strategies and utilities of both players depend on the risk aversion of the agent, whereas only the agent’s equilibrium strategies and the inspector’s equilibrium utility depend on the risk aversion of the inspector. Analysis of an incomplete information game version, when the agent has a private risk attitude, reveals that in order to know how to act in equilibrium, the inspector must know the probability that the agent is risk averse.

Suggested Citation

  • Yael Deutsch & Boaz Golany, 2018. "The effect of risk aversion on the outcomes of inspection games," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(5), pages 645-660, May.
    • Handle: RePEc:taf:tjorxx:v:69:y:2018:i:5:p:645-660
    DOI: 10.1057/s41274-017-0284-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1057/s41274-017-0284-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41274-017-0284-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yael Deutsch & Boaz Golany, 2019. "Securing Gates of a Protected Area: A Hybrid Game and Queueing Theory Modeling Approach," Decision Analysis, INFORMS, vol. 16(1), pages 31-45, March.
    2. Orenstein, Ido & Raviv, Tal, 2022. "Parcel delivery using the hyperconnected service network," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    3. Deutsch, Yael, 2021. "A polynomial-time method to compute all Nash equilibria solutions of a general two-person inspection game," European Journal of Operational Research, Elsevier, vol. 288(3), pages 1036-1052.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:tjorxx:v:69:y:2018:i:5:p:645-660. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/tjor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.