Essays in dynamic games of information and risk sharing

Diamantopoulos, Angelos (2022) Essays in dynamic games of information and risk sharing. PhD thesis, Birkbeck, University of London.

Abstract

This thesis consists of three chapters on dynamic games. In the first chapter we consider a dynamic model where a principal delegates learning about the unknown binary state of the world to a biased expert. We find that when preferences of the principal and the expert are sufficiently closely aligned, retaining some decision making authority may be detrimental for the principal. The second chapter develops a model that captures risk taking behaviour of banks. We characterise the unique NE in which banks endogenise the systemic consequence of their actions. In the third chapter we create an algorithm to simulate a risk sharing agreement between two parties that both produce a perishable good. Production is privately known and the parties cannot commit to a long-term contract. We estimate the expected gains of this agreement compared to the case of no sharing. The results can be used to quantify the opportunity cost of not setting a bilaterally-trusted independent authority that monitors and publicly reports electricity generation between two developing countries that want to share electricity.

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