Nobel Prize-winning Game Theory Solutions to International Conflict

The Strategy of Conflict pic
The Strategy of Conflict
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The head of Financial Research, Training & Consulting, LLP, Dr. Antonios (Tony) Antoniou previously engaged as professor of finance at Durham University in the United Kingdom. Dr. Antonios Antoniou has a strong interest in finance and banking systems, and is particularly drawn to the way in which economic interests can be a vital tool in conflict resolution.

In 2005, a pair of researchers spanning the University of Maryland and the Hebrew University of Jerusalem earned a Nobel Prize in economics for employing game theory in examining conflicts between corporations and nations. Game theory is an interactive analytical framework that provides a way of evaluating strategies ranging from wars to international trade agreements.

The scholars’ groundbreaking work examined how cooperation is successfully enacted among certain groups of countries and organizations while others remain conflict prone. They built on research extending to the 1950s and Prof. Thomas C. Schelling’s classic book The Strategy of Conflict (1981), which illustrates how significantly worsening one’s options can strengthen one’s competitive position, and that maintaining ability to retaliate is often more vital than resisting attack.

Seen through a Cold War lens, these insights had an outsized role in defining efforts to avoid nuclear war and negotiate an end to seemingly intractable conflicts.

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Euro Zone Economy Sluggish Despite Growth Measures

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Euro Zone Economy
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Dr. Antonios (Tony) Antoniou has a background as finance professor with Durham University, where he was responsible for oversight of strategic planning and curriculum development within the Business School. With a longstanding interest in economic prosperity and the globalization process, Dr. Antonios Antoniou follows economic development trends among Euro currency-linked countries.

With the European Union having been buffeted by a number of crises, from Greece’s debt issues to an influx of refugees from war-torn Syria, the 19-strong Eurozone is continuing to experience low growth. A February 2016 Economist survey noted that GDP still lagged behind pre-financial crisis 2008 levels, while the U.S. economy had surged ahead by 10 percent.

The Economist painted this as particularly dire, considering the positive effect that an oil price collapse had had in driving consumer spending growth, which is seen as a pathway toward recovery. Eurozone sluggishness has also resisted measures by the European Central Bank to spark growth through a policy of negative interest rates and quantitative easing, which involves printing money to purchase financial assets. Despite these macro-level efforts, stock markets are unsure of their footing, and exports of key products to emerging markets (for example, German luxury cars to China) have been dwindling.

Looking at Conflict with Game Theory

Game Theory pic
Game Theory
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Dr. Antonios (Tony) Antoniou is an expert in business and finance and achieved recognition in Jean I. Heck and Philip L. Cooley’s study, “Most Prolific Authors in the Finance Literature: 1959 – 2008.” Amid Dr. Antonios Antoniou’s research interests is the question of how economics can be used in conflict resolution.

In 2005, Robert J. Aumann and Thomas C. Schelling won the Nobel Prize in Economic Sciences when they used economic game theory to study conflicts such as wars, wage negotiations, trade, and even organized crime.

Game theory, which is sometimes called interactive decision theory, explores how agents in conflict make decisions when their choices are interdependent, and predicts actions based on what each agent believes the other agent will do.

Schelling’s book, The Strategy of Conflict, proposed game theory as an effective way to understand conflict in the context of the nuclear arms race in the late 1950s. Aumann later built on Schelling’s ideas to explore what game theory can reveal about longer term relations. Game theory has become a dominant strategy for understanding and predicting conflict in a range of contexts.

Are MBA Programs Still Relevant?

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MBA Relevance
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Dr. Antonios (Tony) Antoniou is a prolific writer and consultant with extensive experience in business, finance, and economics. As such, Dr. Antonios Antoniou stays abreast of field-related issues, such as questions about how MBA programs hold up amid today’s economic realities.

Since 1985, the demand for traditional two-year MBA programs has dipped periodically and leveled off in recent years. In an era of recession where there is a growing demand for entrepreneurship and a need for innovative solutions to the world’s problems, some believe that MBA programs as they currently exist may not offer enough to students who want to succeed today.

Some MBA programs are answering to these issues by innovating their teaching models. Here, students can look at real companies in their startup phase rather than simply at case studies, and are being trained to think more like entrepreneurs.

Even the traditional MBA programs still have benefits, however, at least on the financial level. Students are usually able to pay back their investment within 3.9 years, and graduates from accredited schools typically have salaries that are 50 percent higher than what they were earning before they went to business school. As these programs innovate and offer more useful real-world information, graduates may indeed still find success from achieving a MBA.

Management vs. Leadership

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Management vs. Leadership
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Antonios “Tony” Antoniou is the chief executive officer of Financial Research, Training & Consulting, LLP. Over the course of his career, Antonios Antoniou has established himself as a highly effective manager and business leader.

Although the concepts of management and leadership share many of the same characteristics, there are a number or key differences between them. Successful managers must demonstrate the ability to execute a strategic plan by dividing it into small pieces and distributing tasks among team members. Managers must also establish processes and procedures to guide a team and anticipate needs that may arise in the future.

While management deals primarily with the execution of tasks and the delegation of responsibilities, leadership involves less tangible attributes such as honesty, integrity, and inspiration. The best leaders help their teams perform to their maximum potential and communicate the details of projects effectively. When necessary, leaders must be able to challenge established procedures and think outside the box, always searching for the most efficient way to achieve their objectives.

The Pros and Cons of Globalization

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Global Finance
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The chief executive officer of Financial Research, Training & Consulting, LLP, Antonios “Tony” Antoniou spent the better part of 15 years as a professor of finance and economics at Brunel University and Durham University. During his time in academia, Antonios Antoniou taught courses in several areas of global finance.

In the wake of rapid globalization occurring over the past several decades, winners and losers have emerged in regions throughout the world. Perhaps no group has benefited more from globalization than the so-called “global middle class,” which includes emerging economies such as those of China, India, Brazil, and Indonesia. While the top 1 percent of the world’s earners have seen significant gains from globalization, those at the bottom of the economic ladder have seen their situation in the world economy worsen.

According to economist Branko Milanovic, ensuring shared prosperity must involve high growth rates among nations at the bottom, which has already occurred in places such as India and China. Milanovic also suggests a global wealth redistribution plan, although efforts to date have been unenthusiastic at best. Finally, Milanovic contends that free migration of labor would allow people the chance to prosper, regardless of where they end up.

International versus Domestic Portfolio Diversification

Dr. Antonios Antoniou is the CEO of FRT Consulting. Dr. Antonios Antoniou has published numerous papers, including “Why diversify internationally when domestic diversification provides similar benefits?”

Tony Antoniou and his co-authors point out that investors’ portfolios generally contain more domestic than international stocks, even though it is better in theory to diversify. Known as home bias, the principle holds that investors prefer local stocks, as diversifying internationally is believed to entail additional risks such as exchange rate risk and restrictions on capital flows.

Despite these limitations, the call to obtain international diversification benefits led to the development of country/regional funds. Furthermore, more foreign companies have listed on stock exchanges in developed markets, and multinational stocks are often listed in domestic markets. This has produced an environment where some international diversification benefits can still be derived.

Using better estimation methods and creating local diversification portfolios that imitated foreign equity indices, the study showed that there were actually no significant benefits to having an internationally diversified portfolio. A diversified local portfolio can produce results that are similar to an internationally diversified one.

The European Commission Invests in Cross-Border Cooperation Programs

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European Union
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A consulting executive at Financial Research, Training & Consulting, LLP, Dr. Antonios (Tony) Antoniou specializes in financial guidance for medium-sized businesses. A former economics and finance professor, Dr. Antonios Antoniou enjoys staying abreast of issues impacting the European economy.

As of 2013, a majority of Europe’s wealth was held by citizens residing in Germany, the United Kingdom, France, and Italy. In fact, the countries possessed 73 percent of continent’s wealth, while countries, such as Greece and Spain dealt with gross domestic product contractions of negative 22 percent and 6 percent, respectively.

To enhance regional development and limit wealth gaps, the European Commission announced its use of cross-border cooperation programs in 2016. Intended for roll-out in 27 European countries, the programs will finance projects that target poverty prevention, environment change, education, border management, and energy, among others. Funding will come from the European Regional Development Fund, from which the commission has allotted 1 billion Euros to support the initiative.

Commissioners from eligible countries recognize the effort as a way to instill solidarity among countries in the European Union. Further, the programs are expected to spur competitiveness in local economies and help residents overcome economic challenges.

Economic Inequality and Addressing It in the United States

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Financial Research, Training Consulting
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A former professor of economics and finance, Dr. Antonios “Tony” Antoniou dedicated more than two decades to the field of academia. Dr. Antonios Antoniou leverages his expertise to consult business clients at Financial Research, Training & Consulting, LLP, which he leads as chief executive officer.

In the latest report released by anti-poverty charity Oxfam, nearly half of the world’s wealth is held by 1 percent of the population. The nonprofit organization released a statement in conjunction with the report that predicted that in 2016, the richest 1 percent will secure more than half the money circulating the globe.

To address economic inequality in the United States, Pres. Barack Obama shared his proposed redistributive tax plan during his final State of the Union speech. The tax would garner in excess of $300 billion from the top 1 percent of the nation’s richest people and allocate the funds toward services that help working-class families. Pending support for enactment, the tax proposal brings awareness about economic inequality to the public. It is expected to be a topic of discussion during the 2016 presidential campaign.

Dr. Antonios Antoniou: An Introduction to Applied Economics

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Financial Research, Training Consulting
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A former Professor of Finance and specialist in behavioural and applied economics, Dr. Antonios Antoniou holds a Bachelor of Arts in Economics, a Master of Science in Accounting and Finance, and a Doctor of Philosophy in Applied Economics. As a pioneer of doctoral programmes in finance and the CEO and Consultant at Financial Research, Training & Consulting, LLP, Dr. Antoniou has amassed considerable experience in a wide range of economic and financial disciplines and theories. He holds a particular interest in applied economics, the subject of his doctoral research.

Basically, the term “applied economics” refers to the practice of using economic theory and analysis to evaluate real-world problems and address practical issues. Applied economics, therefore, can influence a variety of other fields, including labour economics, industrial organisation, public economics, development economics, and economic history. Economists approach application of the theory in a number of different ways. Case studies, historical analogy, input-output analysis, and empirical estimation through the use of econometrics are four possible approaches.

The origins of applied economic theory can be traced back to French economist Jean-Baptiste Say and British philosopher John Stuart Mill, but the first use of the term “applied economics” can be attributed to British economist J.N. Keynes. In The Scope and Method of Political Economy, Keynes argued for replacing what had previously been known as the “art of political economy” with the name “applied economics,” in order to emphasise the practical use of the discipline. Additionally, he endeavoured to distinguish the real-world application of economic theory from the abstract scientific origins of the theory itself.

Later economists, such as Vilfredo Pareto, Léon Walras, and Joseph Schumpeter, argued for different, specific definitions of the discipline. However, most modern economists agree on the general view that applied economic theory involves reducing the abstraction of the core elements of pure economics to make a scientific analogy between abstract concepts and real-world situations. A very basic example of such an analogy would be to apply broad economic theory to analyze the financial situation of a single household. There is no limit to the depth and complexity of the theoretical analogy or the value of applied economics in general.

For more information on applied economics and other related financial topics, refer to the many articles published by Dr. Antonios Antoniou in leading peer-reviewed journals or peruse his co-authored books.