Fund managers - why the best might be the worst: On the evolutionary vigor of risk-seeking behavior

Arbeitspapier

This article explores the influence of competitive conditions on the evolutionary fitness of different risk preferences. As a practical example, the professional competition between fund managers is considered. To explore how different settings of competition parameters, the exclusion rate and the exclusion interval, affect individual investment behavior, an evolutionary model based on a genetic algorithm is developed. The simulation experiments indicate that the influence of competitve conditions on investment behavior and attitudes towards risk is significant. What is alarming is that intense competitive pressure generates riskseeking behavior and undermines the predominance of the most skilled.

Object Details

• ISBN: 978-3-931052-91-1
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BERG Working Paper Series on Government and Growth ; No. 81

Classification and Topics

• Classification: Wirtschaft ; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games ; Criteria for Decision-Making under Risk and Uncertainty ; Portfolio Choice; Investment Decisions ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
• Subject: risk preferences ; competition ; genetic programming ; fund managers ; portfolio theory ; Investmentfonds ; Führungskräfte ; Anlageverhalten ; Risikopräferenz ; Wettbewerb ; Evolutionsökonomik ; Evolutionärer Algorithmus ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Witte, Björn-Christopher
• Event: Veröffentlichung
• (who): Bamberg University, Bamberg Economic Research Group on Government and Growth (BERG)
• (where): Bamberg
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/50318
• Last update: 10.03.2025, 11:44 AM CET