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Inequality is an inherent quality of society. This paper provides actuarial insights into the recognition, measurement, and consequences of inequality. Key underlying concepts are discussed, with an emphasis on the distinction between inequality of opportunity and inequality of outcome. To better design and maintain approaches and programmes that mitigate its adverse effects, it is important to understand its contributing causes. The paper outlines strategies for reflecting on and addressing inequality in actuarial practice. Actuaries are encouraged to work with policymakers, employers, providers, regulators, and individuals in the design and management of sustainable programmes to address some of the critical issues associated with inequality. These programmes can encourage more equal opportunities and protect against the adverse financial effects of outcomes.
Complementing the presentation of the Gaussian free field (GFF) with zero boundary conditions in Chapter 1, and on manifolds in Chapter 5, we devote this chapter to studying further variants of the field. The main example is the GFF in two dimensions with Neumann (or free) boundary conditions. We give a rigorous definition of this field as both a stochastic process indexed by suitable test functions and as a random distribution modulo constants. As in Chapter 1, we show the equivalence of these two viewpoints; however, in this case, further analytical arguments are required. We describe the covariance function of the field, prove key properties such as conformal covariance and the spatial Markov property, and discuss its associated Gaussian multiplicative chaos measures on the boundary of the domain where it is defined. We also cover the definition and properties of the whole plane Gaussian free field and the Gaussian free field with Dirichlet–Neumann boundary conditions, building on the construction of the Neumann GFF. We further prove that the whole plane GFF can be decomposed into a Dirichlet part and a Neumann part. Finally, we show that the total mass of the GMC associated to a Neumann GFF on the unit disc is almost surely finite.
Negative dependence in tournaments has received attention in the literature. The property of negative orthant dependence (NOD) was proved for different tournament models with a special proof for each model. For general round-robin tournaments and knockout tournaments with random draws, Malinovsky and Rinott (2023) unified and simplified many existing results in the literature by proving a stronger property, negative association (NA). For a knockout tournament with a non-random draw, they presented an example to illustrate that ${\boldsymbol{S}}$ is NOD but not NA. However, their proof is not correct. In this paper, we establish the properties of negative regression dependence (NRD), negative left-tail dependence (NLTD), and negative right-tail dependence (NRTD) for a knockout tournament with a random draw and with players being of equal strength. For a knockout tournament with a non-random draw and with equal strength, we prove that ${\boldsymbol{S}}$ is NA and NRTD, while ${\boldsymbol{S}}$ is, in general, not NRD or NLTD.
In this paper, we investigate a competitive market involving two agents who consider both their own wealth and the wealth gap with their opponent. Both agents can invest in a financial market consisting of a risk-free asset and a risky asset, under conditions where model parameters are partially or completely unknown. This setup gives rise to a nonzero-sum differential game within the framework of reinforcement learning (RL). Each agent aims to maximize his own Choquet-regularized, time-inconsistent mean-variance objective. Adopting the dynamic programming approach, we derive a time-consistent Nash equilibrium strategy in a general incomplete market setting. Under the additional assumption of a Gaussian mean return model, we obtain an explicit analytical solution, which facilitates the development of a practical RL algorithm. Notably, the proposed algorithm achieves uniform convergence, even though the conventional policy improvement theorem does not apply to the equilibrium policy. Numerical experiments demonstrate the robustness and effectiveness of the algorithm, underscoring its potential for practical implementation.
This chapter provides an introduction to Liouville conformal field theory on the sphere, as developed in a series of papers starting with the work of David, Kupiainen, Rhodes and Vargas. We give an informal overview of conformal field theory in general and Polyakov’s action, before starting our rigorous presentation. For this, we first spend some time defining Gaussian free fields on general manifolds, and explaining how to construct their associated Gaussian multiplicative chaos measures via uniformisation. We then show how to construct the correlation functions of the theory under certain constraints known as the Seiberg bounds. One remarkable feature of the theory is its integrability: we demonstrate this phenomenon by expressing the k-point correlation functions as negative fractional moments of Gaussian multiplicative chaos. We conclude with a brief overview of some recent developments, including a short discussion of BPZ equations, conformal bootstrap and the proof by Kupiainen, Rhodes and Vargas of the celebrated DOZZ formula.
This chapter provides a self-contained and thorough introduction to the continuum Gaussian free field (GFF) with zero (or Dirichlet) boundary conditions. We start by describing its discrete counterpart, before presenting two constructions of the continuum object: one as a stochastic process, and the other as a random generalised function. We explain the equivalence of these two perspectives, and in the remainder of the chapter, draw on both viewpoints to prove various important properties. In particular, we prove that the GFF satisfies a certain domain Markov property and exhibits precise scaling behaviour. In two dimensions, this is a special case of its (more general) conformal invariance. We go on to study the so-called thick points of the GFF in two dimensions, which are fractal sets of points where the field is atypically “high” and are particularly useful for understanding the Gaussian multiplicative chaos measures associated with the GFF in later chapters. We close the initial chapter with a rigorous scaling limit result, justifying that the continuum GFF is indeed the scaling limit of its discrete counterpart.
This chapter is devoted to the study of so-called quantum surfaces, which are fields defined on a parameterising domain, viewed up to an equivalence relation corresponding to the conformal change of coordinates formula of Chapter 2. We construct various special quantum surfaces enjoying scale-invariance properties, including quantum spheres, discs, wedges and cones. These objects are the conjectured scaling limits of families of random planar maps, as in Chapter 4 for example, depending on the imposed discrete topology. We conclude the chapter by explaining how these quantum surfaces are related in a rigorous way to the Liouville conformal field theory developed in Chapter 5.
In this chapter, we describe a model of random planar maps weighted by self-dual Fortuin-Kasteleyn (FK) percolation. This can be thought of as a canonical discretisation of Liouville quantum gravity. We start with some generalities about planar maps and then introduce the FK random map model, which depends on a parameter , before explaining the conjectured connection to Liouville quantum gravity. A fundamental tool for studying such random planar maps is Sheffield’s (hamburger-cheeseburger) bijection. We first explain it carefully for tree-decorated maps (the special case of the FK model of planar maps with ), which correspond under this bijection to random walk excursions in the quarter-plane. We then explain its generalisation to in detail. This is first used to show that the maps possess an infinite volume limit in the local topology. Then, a theorem of Sheffield gives a scaling limit result for these maps. One consequence is that a phase transition takes place at . Furthermore, it allows one to compute some associated critical exponents when (which are consistent with the KPZ relation of Chapter 3). These arguments are a discrete analogue of the “mating of trees” perspective on Liouville quantum gravity described in Chapter 9.
In this appendix, we define reverse Loewner evolutions and reverse Schramm–Loewner evolutions, then going on to discuss symmetries in law with ordinary (forward) Loewner evolutions.
In this chapter, we take forward the ideas developed in Chapter 8 and show that if one explores a -quantum cone via a certain space-filling SLE with parameter this results in a (stationary) decomposition of the cone into two independent quantum wedges, which are glued along the boundary. Furthermore, as we discover the curve, the relative changes in the boundary lengths evolve like a pair of correlated Brownian motions, where the correlation coefficient depends explicitly on the coupling constant (equivalently, on the parameter of the SLE). This gives a representation of the quantum cone as a glueing (“mating”) of two correlated continuous random trees, which is a direct continuum analogue of the results on random planar maps obtained in Chapter 4. This connection provides a rigorous justification that decorated random planar map models converge to Liouville quantum gravity in a certain precise sense. In order to explain the main results, we give an extensive description and treatment of whole-plane space-filling SLE, although we do not prove the essential but complex fact that it can be defined as a continuous curve.
We describe couplings between Schramm–Loewner Evolution (SLE) curves and variants of the Gaussian free field (GFF). In particular, we give a complete proof of Sheffield’s construction of -quantum boundary length along an curve, as measured by an independent underlying GFF. The main input for this proof is a rigorous construction of the so-called quantum gravity zipper, which is a stationary dynamic on quantum surfaces (defined using a GFF) decorated by SLE. Another consequence of this construction is that drawing an SLE curve on top of an appropriate independent quantum surface splits the surface into two independent and identically distributed (sub)-surfaces, glued according to boundary length. In particular, this shows that SLE curves are solutions of natural random conformal welding problems.
Recent work showing the existence of conflict-free almost-perfect hypergraph matchings has found many applications. We show that, assuming certain simple degree and codegree conditions on the hypergraph $ \mathcal{H}$ and the conflicts to be avoided, a conflict-free almost-perfect matching can be extended to one covering all vertices in a particular subset of $ V(\mathcal{H})$, by using an additional set of edges; in particular, we ensure that our matching avoids all additional conflicts, which may consist of both old and new edges. This setup is useful for various applications in design theory and Ramsey theory. For example, our main result provides a crucial tool in the recent proof of the high-girth existence conjecture due to Delcourt and Postle. It also provides a black box which encapsulates many long and tedious calculations, greatly simplifying the proofs of results in generalised Ramsey theory.