Did COVID-19 Change Life Insurance Offerings?

The profitability of life insurance offerings is contingent on accurate projections and pricing of mortality risk. The COVID-19 pandemic created significant uncertainty, with dire mortality predictions from early forecasts resulting in widespread government intervention and greater individual precaution that reduced the projected death toll. We analyze how life insurance companies changed pricing and offerings in response to COVID-19 using monthly data on term life insurance policies from Compulife. We estimate event-study models that exploit well-established variation in the COVID-19 mortality rate based on age and underlying health status. Despite the increase in mortality risk and significant uncertainty, we find limited evidence that life insurance companies increased premiums or decreased policy offerings due to COVID-19

Rationality, Irrationality and Escalating Behavior in Lowest Unique Bid Auctions

Information technology has revolutionized the traditional structure of markets. The removal of geographical and time constraints has fostered the growth of online auction markets, which now include millions of economic agents worldwide and annual transaction volumes in the billions of dollars. Here, we analyze bid histories of a little studied type of online auctions – lowest unique bid auctions. Similarly to what has been reported for foraging animals searching for scarce food, we find that agents adopt Lévy flight search strategies in their exploration of “bid space”. The Lévy regime, which is characterized by a power-law decaying probability distribution of step lengths, holds over nearly three orders of magnitude. We develop a quantitative model for lowest unique bid online auctions that reveals that agents use nearly optimal bidding strategies. However, agents participating in these auctions do not optimize their financial gain. Indeed, as long as there are many auction participants, a rational profit optimizing agent would choose not to participate in these auction markets

A decision support framework for project sponsors in the planning stage of build-operate-transfer (BOT) projects

Every decision-making problem is oriented towards the selection of the correct strategies for achieving objectives, and depends on the assumptions associated with different scenarios. Project planning in a buildoperate-transfer (BOT) project is a complicated decision-making problem because the model has a complex financial and organizational structure which is influenced also by the socio-economic environment in a country. A decision support framework is reported, as used in the planning stage of a hydropower plant project in Turkey, which helped the project company to check project viability against some predefined critical success factors, define the risk sharing scenarios under which a project becomes viable, incorporate risks into cash flow analysis and, finally, define effective risk mitigation strategies. Key challenges in the realization of BOT projects, particularly in developing countries, are discussed together with possible risk sharing principles between the private and public sector participants.Build-OPERATE-TRANSFER Bot Model Risk Management Monte Carlo Simulation,