Risk-neutral players are economic agents who are indifferent between a certain outcome and a risky outcome with the same expected value. They neither seek nor avoid risk, making decisions based solely on the mathematical expectation of their returns. This behavioral assumption simplifies economic models by abstracting away individual risk preferences.
Context
In cryptocurrency markets, the concept of risk-neutral players is often used in theoretical models to analyze pricing of derivatives or optimal trading strategies. News reports, however, frequently highlight that real-world crypto investors often exhibit significant risk aversion or risk-seeking behaviors, especially during periods of high volatility. Understanding the divergence from risk-neutrality helps explain market anomalies and the psychological drivers behind speculative movements in digital assets.
A novel deposit-and-transfer mechanism leverages Bayesian game theory to achieve Sybil-proof, utilitarian governance without external identity systems.
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