Bargaining strategy of oil companies in international oil and gas development Projects-Based on a bilateral bargaining model

Bargaining between the host country and oil companies is very common to international oil and gas development projects.The existence of information asymmetry gives the host country an endogenous bargaining advantage.Foreign oil companies might change their unfavorable negotiating position by changing the order of bidding and adjusting bidding strategies.This paper introduces both factors into a bilateral bargaining model to study the impact of information asymmetry and bidding order on the strategy and equilibrium returns of oil companies.According to the ownership of the right to bid first,two scenarios are designed for the model to compare the equilibrium returns of the host country and oil companies.The results show that:1)There is a first-mover advantage in the process of bilateral bidding,so oil companies better bid first;2)The information asymmetry will lead to a higher nominal income ratio of oil companies and a lower nominal income ratio of the host country,but it doesn’t affect the total income ratio at all.

A Markov Copula Model with Regime Switching and Its Application

Regime switching,which is described by a Markov chain,is introduced in a Markov copula model.We prove that the marginals（X,H^i）,i = 1,2,3 of the Markov copula model（X,H） are still Markov processes and have martingale property.In this proposed model,a pricing formula of credit default swap（CDS） with bilateral counterparty risk is derived.

Now decision theory

The spirit of now in nowcasting suggests expanding the current to include the near future.Decision theory is then developed by incorporating the consequences of actions into the present.With the future falling into the present discounting it is no longer permitted.Value functions are then observed to be determinate only up to scale and shift that are then locked down by fixing values arbitrarily in two selected states,much like declaring water to freeze and boil at zero and a hundred degrees celsius.The locked down value functions associated policy functions are seen to exist in decision contexts in where the only time is now.Examples are studied in univariate and multivariate dimensions for the decision state space and the dimension of shocks delivering state transitions.The policy functions are expanded from realisitic training sets to the full state space using Gaussian Process Regression.They are implemented on real data with reported performances.

Lower and upper pricing of financial assets

Modeling of uncertainty by probability errs by ignoring the uncertainty in probability.When financial valuation recognizes the uncertainty of probability,the best the market may offer is a two price framework of a lower and upper valuation.The martingale theory of asset prices is then replaced by the theory of nonlinear martingales.When dealing with pure jump compensators describing probability,the uncertainty in probability is captured by introducing parametric measure distortions.The two price framework then alters asset pricing theory by requiring two required return equations,one each for the lower upper valuation.Proxying lower and upper valuations by daily lows and highs,the paper delivers the first empirical study of nonlinear martingales via the modeling and simultaneous estimation of the two required return equations.