Evolutionary Analysis of Risk Attitudes in Competitive Bidding Environments Using Simulation

Exactly how risk-averse a person should be is an elusive question that may be answerable only through evolutionary analysis. The literature on the evolution of risk attitudes is quite diffuse. Researchers have taken widely varying approaches. A survey of these approaches is presented. One approach to study the evolution is to simulate a small society of individuals whose risk taking behaviors are interrelated according to simple rules. The aim of this paper is to introduce a few different ways to conduct such simulations and visualize the results. These approaches can be extended in diverse ways. While this type of simulation is unlikely to produce normative or prescriptive results for an individual, it may reveal some facts about the collective fate of a society. Simulation codes written in Mathematica are included.