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April 2013

Puzzle Pig on a Rope Farmer Hogswill owns a field, which is a perfect equilateral triangle, each side 100 metres long. His prize pig Pigasus is tied to one corner, so that the portion of the field that Pigasus can reach is exactly half the total area. How long is the rope? You may – indeed, must – assume that the pig has zero size (which admittedly is pretty silly) and that the rope is infinitely thin and any necessary knots can be ignored.

The solution to the puzzle will be provided in the next issue of the PerVectum.

Solution to the Puzzle PerVectum issue 2, 2012-2013 Magic Stars Solution: This arrangement – possibly rotated or reflected – is the only solution.



Word from the President Dear fellow econometricians, At the moment you are reading the third issue of the PerVectum, which means that we have already reached block 5 of the current academic year. As such, it is a great opportunity to look back at the activities we recently had, but also to look forward to what still has to come. Block 4 was a period full of exciting activities. In the last week of January, the famous SCOPE | Vectum Business Trip took place. With a group of 25 students we headed off to Eindhoven, Amsterdam and The Hague to visit five different companies. The participating third and fourth year students managed to get clear insight in what these possible future employers have to offer. Next to that, we planned an Alumni Drink on the second day of the trip which was very well attended. In my opinion, the trip was a great success (despite some navigation problems). That is why, at this point, I would like to thank all the participating companies and of course my Business Trip Committee for their hard work and commitment. Ellissa’s article in this issue will guide you extensively through these four neat but intense days.

In the upcoming week, we stayed in the career-related atmosphere as the LED 2013 took place. On February 5, more than thirty third and fourth year students set off to the beautiful Beatrix Theatre in Utrecht. You can read Marie’s article to find out more about her first acquaintance with this ambitious national event. One week later, we had an interesting Research Lecture by Tjark Vredeveld, who presented his work on scheduling elevators. We were very happy to welcome an overwhelming number of students during this event! After the lecture, some third year students took over to tell us more about their 4

April 2013

numerous exchange adventures. The evening ended with our usual block drink in the Preuverij.

will also be more informal activities like Beer Tasting and Karting, with as a final highlight the famous Members’ weekend. This year, we will set off to the beautiful countryside of Belgium to end the academic year together in style. For a complete overview, please check out the list of upcoming activities in the back of this PerVectum.

Because of the success of the first Pub Quiz, we decided to organize a second one in the third week of block 4. Michael once again surprised us with a diverse amount of brainteasers. The follow-up activity was the Poker Tournament, which resulted in a harsh competition full of strategic thinking and bluffing. In the end, Silas turned out to be victorious. We ended the block with the Master & PhD Information Evening and a new activity called ‘Game Evening’.

Finally, the fact that you are currently holding the third PerVectum of this academic year in your hands, sadly means that our board year is almost over. In this issue, you can find an article with descriptions of the different board positions within SCOPE | Vectum. I would like to encourage all of you to carefully read through them and to see whether you see yourself resembled in one of these positions. If you consider applying for one of the positions for next year and still have questions, please do not hesitate to approach me or any of my fellow board members at any time.

Next to articles on some of the aforementioned events, you will have the chance to read more about Martijn’s experience to work at Kleynen Consultants. And there is more! Elnaz Bajoori will tell you more about the research she is currently doing in the field of Game Theory. Suzanne takes us on a trip through the beautiful country Argentina and professor Ton Storcken introduces himself in a new edition of ‘Meet the Professor’.

I hope to see many of you at our remaining events of this academic year. Next to that, I would like to seize the opportunity to wish you good luck for the upcoming exams!

Next block, we will once again organize some interesting events. You might already mark the 17th of April in your agenda, as the Kempen&Co Inhouse day is taking place that day. Another big event is planned on Thursday the 2nd of May, namely the SCOPE | Vectum Congress. There

Sean Telg President SCOPE | Vectum 2012-2013



Advertentie Compact Drukwerken


April 2013

Table of contents PerVectum Magazine for Econometrics students at Maastricht University Year 17, issue 3 of 4 April 2013 Circulation 280 copies Print Compact Drukwerken Lanaken

Editor in Chief Maartje Keulen Co-editors Evy Zeptner & Celine Brouwers

3 4 8 11

Pictures Semi-Annual GMA &

Active Members Dinner

12 16 17 19

24 25 SCOPE | Vectum P.O. Box 616 6200 MD Maastricht +31 (0)43 388 39 40 ABN Amro 44 10 37 887 Visiting Address Tongersestraat 43 Room 1.014 6211 LM Maastricht

Puzzle & Solution Word from the President Meet the Professor: Ton Storcken

Business Trip 2013 Pictures Business Trip & Pub Quiz LED 2013 Research: Trembling Hand Perfect Equilibrium in Infinite Games. Pictures Welcome Back Suzanne's Study Abroad in Buenos


30 31 34 38

Pictures LED & Poker Tournament Working at Kleynen Consultants Wanted: new SCOPE | Vectum board Upcoming Activities 7


Meet the Professor Ton Storcken

by Mitchel Boer

As it has been already about 10 years since the last interview with Ton Storcken, we thought that it was about time that the PerVectum would pay him a visit for a new interview! Teaching us econometricians from the very beginning of the Econometrics program, all students know him in one way or another, whether it is for some of his infamous proofs or for his funny jokes and quotes. Could you introduce yourself? My name is Ton Storcken and I like tea. I was born in Geleen and I am currently living in Eindhoven. As I also lived in Tilburg and Echt, I am not what you would call a real Limburger. I first studied for becoming a teacher in mathematics and chemistry and after that I studied mathematics and computer science at the Radboud University in Nijmegen.

I conducted research at Tilburg University. For the foundation of the Econometrics program at Maastricht University, two assistant professors were needed, and I got this job together with Jean-Pierre Urbain. What are you currently doing at the university? Every year I teach some first-year courses such as Microeconomics and Orientation and a part of Second Year Project I. Furthermore, I teach the Optimization part of the thirdyear Dynamic Modeling course and

How long have you been involved with Maastricht University? I have been working at Maastricht University since 1992. At the time, 8

April 2013

some subjects on Social Choice Theory in the Master's Program. Besides teaching, I am also doing research on Social Choice Theory and I guide a few Master’s and PhD students with their theses. At the moment, I am not guiding any Bachelor’s students, but if someone is interested in me doing so, I am fond to do it!

ory is more than enough at the moment; I am glad with my job as it is. Ever since I started working here, there has not been one day that I was reluctant to go to work. I think I am a fortunate person as I have a lot of fun with doing what I do. Many students already know some of your infamous proofs. Can you show us the proof on all men being women?

You are doing research on Social Choice Theory. What is it about? Social Choice Theory is about collective decision making, but also about negotiations and other economic processes. Think of our elections. Given the election outcome, we simply look for the best party that received the most votes. By looking for other information, you can maybe reach different conclusions. Conclusions are, however, usually about “good” collective decisions. We would like the collective decision to reflect the individual ones as much as possible. However, problems arise when we have an ambiguous collective decision. Then we must look for an optimal solution for which concessions have to be made. These are situations that I try to model and analyze.

It started out as a proof on all people having the same gender, but it is funnier while teaching mainly male students to have it in its current form. It is a proof by induction. For the first person it is easy, assuming that we have two genders and not something in between, which would make things a lot more difficult. So, let the first person be female. After that, take k persons and assume that they are all female. If we then take a group of k+1 persons, we know, by assumption, that the first k persons are female. If we then disregard the first person and instead add the k+1st person to the group from 2 to k, we have again k persons. Then, by our assumption, all of these must also be female. Hence the k+1st person is also female, which completes our proof.

Are there any topics on which you still want to do research? My research on Social Choice The9


At some point you showed us a proof on 1 + 1 being 0 but also 2. How do you come up with these proofs?

a Western country, you are privileged and get so many possibilities. Do not think too hard on it though. Of course, you must work hard as Econometrics is a difficult study. We know that we ask a lot from you, but you are also very much capable of that.

It is often just a matter of which method of counting you use. If you look at a clock for example, twelve plus one is one and six plus six is zero. In a similar fashion, the periodic system in chemistry has its own way of counting; it all boils down to algebra and thus to specific systems of calculations. Before the Dutch high school structure was formed as it is now, Dutch students never learned about complex numbers. They were taught that one cannot take the square root of a negative number. With complex numbers you can actually do that though, and so I came along and told them they learned it incorrectly. Unfortunately, after the restructuring of the high school system, some Dutch students already learn it at high school. Do you have any advice for our fellow students? My advice would be that you should work hard, but at the same time do not forget to enjoy life. It is over before you know it, especially when you are young. As young people in 10

April 2013

Impressions from Semi-Annual GMA

Impressions from Active Members Dinner



Business Trip 2013

Ellis in Business Wonderland by Ellissa Verseput During our well-deserved week off after the skills block, I was in the lucky position to join the SCOPE | Vectum Business Trip. Although normally only third and fourth year students survive the CV selection, I was able to go as well, thanks to Marloes’ advice to join the Business Trip committee.

We were perfectly on time, which we could be really proud of, as experiences later that week showed this would be the first and last time that we did not have to claim our ‘limburgs kwertierke’.

Having looked forward to it for a long time, my trip finally started at the station of Sittard on Monday morning the 28th of January. Due to my enthusiasm, a suitcase and changed train schedules, I managed to step into a train which was not going to Maastricht, but into the opposite direction. Therefore, the start of my trip was not that exciting, as I spent the first hour waiting on a cold bench at the station of Roermond. Three minutes before the train with my fellow business trippers arrived, my eyes fell on two young gentlemen, dressed business formal and accompanied by two suitcases. A couple of minutes later they turned out to be Maarten and Luuk, who had just come back from their exchange. After a warm welcome with laughter about my brilliant action that morning, we quickly arrived in Eindhoven and had our first trolley walk to the company on the Monday programme: KPMG.

At KPMG Dennis van de Wiel, an old Vectum member, gave us insight into his job and thereby into the opportunities for econometricians in this consultancy company. Next to that, their structure and activities were clearly explained and all this, together with a great tasting muffing and drinks, resulted in a great first impression and kick-off of the company visits. Before we left for the train again, I became familiar with a scene, which would return every day onwards. Girls quickly changing their high heels for flats; boys throwing off their ties and opening the upper buttons of their shirts. Although many discussions have been held about whether my clothes were 12

April 2013 business formal or casual (apparently, only granny skirts are allowed…), I succeeded in not joining this ingenious outfit changing during the whole week. Well, what can I say; my feet are the youngest.

about investigating and improving the financial practices of the company ‘Life for Life.’ Some groups thought very out of the box, as the main conclusion of one group was that they had had too little time and needed to postpone their deadline, whereas my group mainly observed a good working atmosphere in the company in question. Other groups had more impressive results and managed to solve the case almost completely.

Before darkness, we arrived at the Stayokay in the Amsterdam Vondelpark, even though our journey had not been completely flawless. Not only timing seemed to be quiet difficult sometimes, but also navigating through the cities turned out to be not that easy. That evening, it was time for one of my highlights of the trip. As a member of the Business Trip committee, I was in charge of the Monday evening dinner, which I had arranged at Mr. Tongs. Everyone enjoyed the Indonesian rice table and the other committee members and I could finally figure out the gender of the correspondent Wai Wong. Having filled our stomachs, we ended the day at the famous café de Gieter. A couple of beers and games of ‘Mex’ later, most of us took some hours of sleep, as we had to get up early the next morning.

After lunch at PwC, we continued our trip to Optiver, the second company on the schedule of that day, where we were offered a nice mix of presentations and activities. For instance, quickly after the start of their programme, they announced that we had to do one of the selection tests they use for applicants. I noticed that some boys, who were already familiar with this test, put off their jackets, loosened their ties and rolled their sleeves. I quickly found out why: eight minutes of pure concentration and sweat drops followed, in which we all had to solve as many mathematical exercises as possible. Afterwards we listened to some presentations about two different job opportunities at Optiver, namely working as a wholesale trader and as a screen trader. Furthermore, we had a tour on the trading floor and did a trading game with cards, with Cumaran as one of the leaders of the groups.

After a little ladies delay at departure on Tuesday morning, we went to our second company visit at PWC. Enjoying a second breakfast there with (again) excellent muffins, we listened to an introduction presentation about the company. Next, PwC provided a very challenging case, which was 13

PerVectum tram for a short solo ride, which was really funny. A boat ride and little walk later, we arrived at Shell. Their main message was that they offered really cool jobs, with all kind of possibilities and opportunities you can come up with. Most impressive was maybe the real life job story of a gentleman, who would soon start working at the end of the world: East Russia.

Around six o’clock, we entered the cafeteria of Optiver, where the delicious smell of dozens of pizzas penetrated our noses. As you could already read so far, we had not eaten anything since the lunch at PwC, so we all indulged and enjoyed our own beer tap while talking to some employees or simply enjoying a pool game.

That evening, everyone was glad to have a little rest in the train to The Hague. After some relaxing time in the Stayokay, everyone went to the inner city for dinner. There were no activities scheduled, but still most of us ate and enjoyed the soccer match Barcelona-Real Madrid together. Due to the busy days so far, nobody felt like partying until late, so a cocktail at the bar across the street of the Stayokay around 12 was the last activity of that day.

Later that night, we would see some of the alumni we met during our company visits again, as we had an Alumni drink in de Gieter. It was good to see how all of them, although doing very serious jobs now, were still in for a nice drink and a good student party! When the Gieter closed around two, all alumni had left, but most of us still fancied a little after party at Bubbels! The next morning at breakfast, one could simply pick out the people who joined this after party, but still two gentlemen, mentioned before, turned out to be the kings of partying and consequently arrived too late in the entrance hall for departure. Also Celine turned out to be still a bit asleep, because she stepped into the wrong

Sooner than anyone could have imagined, it was already Thursday, the last day of our trip. However, this day was definitely a good example of last but not least. AEGON had arranged 14

April 2013 an amazingly dense programme, full with presentations, a case, a quiz and of course coffee and lunch breaks. Especially the aspect that Michel and Dennis, two former Vectum members, had organised the whole day and the fact that everyone had slept quite well, stimulated us all to make most of our last company visit. Our trip ended with a last drink together at AEGON. Although exhausted and completely satisfied with so many new impressions of all the companies, everyone regretted that it was all over. We really had an amazing time together these four days.

I got to know many nice fellow econometricians, learned a lot about all different kind of companies and job opportunities and enjoyed the evenings in Amsterdam and The Hague. Even though I am from now on known as Ellis by all the other business trippers, organising and joining the Business Trip was definitely worth the effort.

All in all, I can conclude that I had never wanted to miss this great adventure in Business Wonderland.

Next year again!



Impressions from Business Trip

Impressions from Pub Quiz


April 2013

LED 2013 by Marie Koorneef The Landelijke Econometristen Dag 2013; a day on which all the Econometricians studying in the Netherlands travelled to the heart of the country: Utrecht. This year’s event was organised by Asset | Econometrics Tilburg. February 5 became my hazing. After years of hearing about the LED, I could not wait to go for the first time myself. I always heard great stories about the after party. However, as people grow older and the start of my career is coming closer, I was now particularly interested in learning about the companies as well.

have a seat – Jim was so kind to offer me his knee. Half sleeping, solving puzzles and listening to music we arrived in Utrecht. The day in Utrecht started with receiving our goodie bag with, beyond many things, a fat Chinese wrestler stress ball. That I have ever lived without it…

A short lecture and discussion on the Basel agreement and implications regarding banks followed. Questions could be asked after the introduction – the debate started. One interesting fact; although the majority of the students were men, most questions were asked by women!

Let the story begin! On February 5, a bunch of Econometricians took the train from Maastricht at 6.30 (!) a.m. I was fortunate enough to be able to take the train one hour later in Eindhoven. As a consequence I did not

After the debate the first round of cases took place. Everyone was al-



lowed to provide his or her interests at subscription in December, however the final allocation is not communicated until arrival. I was assigned to Ortec Finance; they gave an interesting case about the world of Asset Liability Management (ALM). In short, we had to calculate/compute scenarios with the recently renewed Ortec Finance model. Ultimately, the objective is to reach the best possible optimal policy. This policy had to be presented later by the different groups.

SER and former member of the ‘Innovatieplatform’ he is an expert on this subject. Once the speech was done, all kinds of beverages were being served. A nice opportunity to both evaluate the day with fellow students and to talk to different companies present. After that, it was dinner time! We were asked to go to our tables in an enormous hall. I was assigned to the Duisenberg School of Finance. Our vice-president (Michiel, red.) was my table partner.

The lunch started – luxury sandwiches! Moreover, an informal opportunity to talk to companies. Thereafter the second round of cases started. This time I was allowed to join the Boston Consultancy Group (BCG) their company colours matched my outfit perfectly. The case: a pharmacy always delivered their medicines themselves, however recently a concurrent entered the medicine distribution market. Are they a threat? As a strategy consultant we had to solve this case in a short amount of time. Starting with a hypothesis, we could ‘buy’ a certain amount of information and had to support/reject our hypothesis.

To end the day, we went to our (not so fabulous) hostel in the centre of Utrecht. After storing our bags and a quick change of outfit, we went to the famous after party to have a great evening with econometricians from the whole country. The rest of the evening is confidential.

After the second workshop, in the early evening, a second lecture followed. Ir. W. Draijer spoke about the use of quantitative analyses for policy advises. As chairman of the 18

April 2013

Trembling Hand Perfect Equilibrium in Infinite Games by Elnaz Bajoori A main question in game theory is how each player should behave so that his partial influence on the game benefits him the most. An answer to this question is called a solution for the game. John Nash in 1950 introduced the solution concept of Nash equilibriua for normal form games and proved its existence in randomized strategies for normal form games. A Nash equilibrium is a profile of (possibly randomized) strategies in which no player can improve his payoff by unilateral deviation.

Nash equilibrium. Nevertheless, the latter Nash equilibrium is not sensible and every player chooses an action that is weakly dominated.

To explain Nash equilibria, consider the following game which is called public good game. In this game at least 2 players are involved and each player has to choose an action from the set {yes, no}. If all of them choose yes, the public good will be provided to the players, consequently they will all enjoy a strictly positive payoff. Otherwise, they do not get anything and the payoff is zero for all players. This game contains many Nash equilibria. The most obvious Nash equilibrium is the strategy profile in which all players choose yes. However, the profile where all players choose no is also a

A Perfect equilibrium is a Nash equilibrium in which players choose strategies that are robust against small mistakes in the choice of actions by opponents. In the above public good game, the only perfect equilibrium is the profile in which every player says yes. The reason is that if each player takes making mistakes by his opponents serious, then he believes that all his opponents say yes at least with a small probability. This is enough for him to choose yes, because by doing so he gets a strictly positive payoff, even though with a small probability.

Hence, it seems necessary to refine the Nash equilibrium in order to obtain more intuitive solutions. To address this issue, in 1975 Selten introduced trembling hand perfect equilibria, a refinement of Nash equilibria for games with finite action spaces that rule out equilibria where such weakly dominated strategies are played.


PerVectum While, by choosing no he gets zero surely. The profile (yes,yes,....,yes) that is robust with respect to small perturbations, is the only intuitive equilibrium in this game.

In this research we investigate the relations between different types of perfect equilibriua for normal form games with infinite action spaces, introduced by Simon and Stinchcombe. We propose an improved definition of the finitistic approach and prove its existence. Furthermore, we provide two examples that imply a severe critique of the finitistic approach, despite the fact that this approach appeals to basic intuition. In the first example any version of a finitistic perfect equilibrium admits a Nash equilibrium strategy profile that is in the limit of weakly dominated strategies. The second example gives a completely mixed (and hence trembling hand perfect in the first approach) Nash equilibrium that is not finitistically perfect. We explain this example briefly here.

In modern economic theory there are many game theoretic models that feature an infinity of possible choices. Some of the important examples of such games are auctions, Cournot competition, cake division, and location games. Since in such models also Nash equilibria may use weakly dominated strategies, in 1995 Simon and Stinchcombe defined perfect equilibria for games with infinite action spaces. They distinguished two different approaches. The first approach, that is a direct generalization of the original definition of Selten, is based on completely mixed strategies. Whereas, the second approach is based on finite approximations of the infinite game in question and is called the finitistic approach. In this approach, for each player i's action space Ai, consider a sequence (Bik)∞k=1 of finite subsets of Ai such that in the limit when k → ∞ the original action space Ai can be obtained. Therefore, along the sequence, for every k, there is a finite game for which Selten's perfect equilibrium can be applied. After deriving a perfect equilibrium for every k, by taking the limit as k → ∞ the perfect equilibrium in finitistic approach would be achieved.

EXAMPLE. Consider a game with two players in which the action spaces are A1 = A2 = (1, 2, ...., ∞, ∞+1), where all natural numbers and ∞ + 1 are isolated points, whereas ∞ is the limit of the sequence 1,2,... The structure is shown in the picture below:

The payoff functions u1 and u2 are symmetric and u1 is given in the table on the next page:


April 2013 payoff, mixing between actions ∞+1 and k is not a best response for him. Therefore, the achieved equilibrium for every k does not converge to the completely mixed strategy profile (σ1, σ2) as k → ∞. Note that in some of the applications mentioned above information is not always fully disclosed. Those are situations where players may have private information about the game, consequently they may be uncertain about the payoffs. Such games are called games with incomplete information.

--Define the strategies 1 and 2 by σ1 = σ2 = (1/4) * δ(1) + (1/8) * δ(2) + .... + (1/4) * δ(∞) + (1/4) * δ(∞+1).

One of the interesting examples of such games is auctions. Consider a sealed bid second-price auction known as the Vickrey auction. In such auctions each bidder knows the valuation of the object for himself, but he does not know the other bidders' valuations. There are many equilibria in this auction, however, Vickrey showed that bidding his own valuation of the object is a dominant strategy for each bidder. Now, consider a sealed bid secondprice auction in which each bidder has only partial information on the valuation of the object even for himself. In this auction, bidders might not have any dominant strategy while there are multiple equilibria. Therefore, a selection tool is needed that can rule out the less intuitive equilibria. This motivates us to study perfect equilibria as a selection criterion in games with

which means that each player i plays action 1 with probability 1/4 , action 2 with probability 1/8 and so on. The strategy profile (σ1, σ2) is a completely mixed, and hence perfect equilibrium in the first approach by Simon and Stinchcombe (based on completely mixed strategies). However, it is not finitistically perfect. The reason is explained in the following: For every player i, take any sequence (Bik)∞k=1 of finite subsets of Ai with the property that in the limit the action space Ai can be obtained. For instance, let Bik = {1,2,3,.....,k,∞+1} for every player i = 1, 2. Also, let σ2k be a completely mixed strategy over B2k. Since in the finite game restricted to B1k x B2k, player 1 by choosing ∞+1 gets zero and by choosing k gets strictly positive 21

PerVectum incomplete information.

A distributional strategy is a probability distribution on T x A for which the marginal distribution on T equals µ. In the next table, ϒ is the distributional strategy induced by the behaviorial strategy β.

We extend Selten's trembling hand approach to equilibrium refinement to games with incomplete information, specically Bayesian games. In a Bayesian game, first each player receives private information, called the type of this player, which is drawn according to a known probability distribution. Subsequently, depending on his own type, each player chooses an action, and then receives a payoff depending on the types and the chosen actions of all players. We develop the concept of perfect equilibria for such games by taking two different approaches. The difference between these two approaches is at using two distinct strategies. One is called behavioral strategy and the other one is called distributional strategy. To explain the idea of these two strategies, consider the following 1-player Bayesian game. In this game the only player receives a type from the set T={s,t} according to the distribution µ=(1/3)*s+(2/3)*t. Then, he chooses an action from his action space A={a,b}. A behavioral strategy is a probability distribution on the action space for each type. The table below, demonstrates an example of a behaviorial strategy in this game.

Note that for every behaviorial strategy there is a unique induced distributional strategy, but the opposite may not be unique. We define perfect equilibria by making use of both strategies. The first approach is a more straightforward way of defining perfection in such games than the second approach. However, in developing the theory, particularly in proving the existence, it is difficult to work with behaviorial strategies. We prove the existence of perfect equilibria using distributional strategies for Bayesian games under certain continuity assumptions on payoff functions, while we fail to do so in the first approach. Additionally, we apply our definitions of perfect equilibria, in both approaches, to a class of symmetric 22

April 2013 second-price auctions with incomplete information for two bidders. In this auction, each bidder i receives his type ti according to a distribution ¾i and his valuation of the object is given by the function vi(ti, tj), where j ≠ i. We also assume that the valuation functions are symmetric, i.e. v1(t1, t2) = v2(t2, t1). We observe that a perfect equilibrium selects a specific type of equilibria in which the bidding functions are continuous.

Science USA 36, 48-49.

For instance, the strategy profile (b1, b2) in which each bidder bids according to the function bi(ti) = vi(ti, ti), for every i = 1, 2, is a perfect equilibrium. While perfection rules out less intuitive equilibria, for example the equilibrium in which one bidder bids the highest possible bid and the other bidder bids the lowest possible bid, regardless their types. Obviously, in this equilibrium one bidder always wins the auction and the other one always looses, no matter what type they receive.

[5] Vickrey W (1961): Counterspeculation, Auctions, and Competitive Sealed Tenders. The Journal of Finance 16, (1) 8-37.

[3] Selten R (1975): Reexamination of the Perfectness Concept for Equilibrium Points in Extensive Games. International Journal of Game Theory 4, 25{55. [4] Simon LK and Stinchcombe MM (1995): Equilibrium Renement for Innite Normal-form Games. Econometrica 63, 1421{1443.

References [1] Milgrom PR, Weber RJ (1985): Distributional Strategies for Games with Incomplete Information. Mathematics of Operations Research 10, 619{632. [2] Nash JF (1950): Equilibrium points in n-person games. Proceedings from the National Academy of 23


Impressions from Welcome Back


April 2013

From Rio de Janeiro to Lima in 202 Days About a girl that returned with a backpack full of experiences

by Suzanne de Boef It was on my last day in South America, drinking my last pisco sour in world’s most famous pisco bar, when a random guy told me I was like a mariposa – a butterfly. Since I am from one of the best countries in the world and flew over to discover other places. Like a butterfly, which you will always spot on the most beautiful places on earth.

Buenos Aires? True! Buenos Aires is a city to fall in love with (and ín, but that’s another story and I can’t tell) . It has an amazing vibrant atmosphere and the best parties in the world take place there (quoting David Guetta). After 4 months I still felt like a tourist since

I arrived a bit later during the first lecture of the year. All 3rd year econometricians gathered again in one of the small basement rooms. It was the first time I saw them again. Still the same people and we all knew what everyone did past half a year, because Facebook never lets us down. Though I felt kind of exited. Coming back with some visible tan and a nose piercing, I received a lot of curious faces.

there is so much to discover. It’s not big, it’s huge. I grew up in a ‘city’ with 4000 inhabitants and always thought Amsterdam was incredible big. Now I know better. Also due to the fact that I did barely speak the language.

When I think about my exchange I think about the traveling after my exchange which took two whole months. Probably because it is most recent – I write this two weeks after my return. Also because that is why I went to Buenos Aires after all. I simply wanted to travel in South America. I wanted to escape the structural culture of Western Europe for a while. And where better to go in South America than in

I spoke 10 words of Spanish before I arrived and chose not to take courses. I assumed living there would offer me enough opportunities to learn. I don’t exactly recall how I managed to pass my courses that were taught in Spanish, but I did. On the other hand, by 25

PerVectum learning Spanish comes learning hów to speak Spanish. South Americans can achieve anything by talking. As a typical European this is hard to understand; when something is impossible, it’s not possible. In South America everything is possible, you just have to have a smooth talk. After six and a half months I think I managed this part at least.

menu - to ensure a good place on the Big Mac Index. While unofficial inflation rate is around 30%, officially it’s 10% annual. This is just one indication why a lot of Argentinians don’t trust their government. There are currently a lot of good reads wondering around the internet, you might be interested in a well-formed economy going nuts. Living in Argentina was definitely less foreseeable than in the Netherlands. You will get what you want, it just takes (unnecessary) time. Companies there don’t even do middle or long term goals, since every single day something will change in the law, regulations or just because of the randomness of peoples decisions. My main examples about this unpredictability are about my visa and the day I tried to leave Buenos Aires. About the first one, well, all what’s important is that my passport now includes an anulado (cancelled) stamp for Argentina for unknown reason, while my actual visa is 2 printed papers with an official autograph.

Since I lived with two Argentinian girls, I got to know about their culture and I got involved in their interesting current (political) issues. I also studied the history of Argentina at the university, so I know that some decades ago Argentina was a top 5 world economy. But right now the future doesn’t seem too bright. Everyone over there supports Cristina Kirchner (the president) or is drastically against her government. Indeed, there is good steak and wine and it’s cheap, but those are currently the only things that are still cheap in Argentina. McDonalds is forced to keep a reasonable price for the big mac - about half the price of any other burger, not mentioned on the

Now about the day I tried to leave Buenos Aires: the 5th of December 2012. I was overly prepared: Had emotional goodbyes and overthought the content of my backpack. I also took a cab of 20 minutes to the bus terminal to avoid a slow bus or a metro that might break down because of heat or rain. So, that was me with all my stuff and in my hand the ticket for an 18-hour ride that 26

April 2013 I bought the day before. The ticket service man had to repeat it three times before I realised: The bus would not leave today due to an unexpected national strike that would take at least 24 hours. That day also a gas explosion in the city centre and excessive rain fall took place. It took me 4 hours to get ‘home’ again and I felt misplaced in a lot of ways. It was actually a regular day.

ing views instead. It took me about two weeks to get into the travellers flow and not to worry anymore about busses, hostels and other stuff that needs to be arranged. Or: After two weeks I accepted being a gringo. And with my mastered South American smooth talking I could avoid paying gringotax (getting ripped off). Therefore I was not ashamed to wear – in public – my 8 euro Bolivian llama sweater which is actually made of baby alpaca. Must admit that the lama glama (her binomial name, glamour all over) is awesome. And for the record, they did not spit. People spit too, you know.

It was the 6th of December I left Buenos Aires for real to start my travels at the waterfalls of Iguazú, one of nature’s world wonders. From there I saw some more of northern Argentina, up to Bolivia and I flew home from the capital of Peru, Lima. I had seen some other parts of Argentina, Brazil and Chile already before I left. Which I believe are parts of the world that have culturally so much to offer.

Living got cheap, weather got awesome, food got even better, so I was finally enjoying my well-deserved summer holidays (yes, after one and a half year). It didn’t take me long to find the right people from all over the world; travellers connect really fast. Learning about different cultures, exchanging crazy traveling stories, but most of all make your own good stories. And I definitely got some myself now.

My goal was not to see as much as possible, but just to enjoy ‘hanging around’. Although I planned at least two weeks for myself at the beach, but that appeared too dull so I skipped it and did some hiking with mind-blow-

I have stories about a Christmas’ Eve 27

PerVectum with palm trees and barbecues. About New Year’s Eve with for Dutch standards illegal fireworks. About bike riding on Christmas day while hangover.

genic salt flats, Machu Picchu (mythical Inca city), Colca Canyon (deepest canyon in the world), blowing up dynamite in the movie-like mines of Potosí, drinking coca tea, chasing anaconda’s, swimming with pink river dolphins, and so on. The best stories are actually made by the people. Like how I intentionally missed a night bus to Lima, because my ticket got ripped by this person who had offered me a job to work at his hostel bar. Obviously I accepted. That evening he raised money for my new ticket while celebrating ‘Straya Day. To catch my flight I had to leave the day after. Still want that job though. Nice people worried about me. Seriously, there was no need. All horror stories might be true. Though I believe that if you are a confident person and act like nothing bad is going to happen, it won’t. Living conditions and the people are as different as you think

About biking down death road, while hangover again. About going by bus on the death road to the amazon, surviving the jungle, but taking a plane back to world’s highest airport in La Paz. Experiencing the amazing photo-


April 2013 now. However you’ll adapt quickly if you can accept the irregularities of life. Once you can speak the basics of their language, you can actually communicate and reach a point you feel connected with the locals. I was basically never alone; always met cool and trustable people that I stayed with for a longer time. Some of them I consider now as very good friends after spending weeks 24/7 together. Also I always slept in comfortable beds. Only when I was in the jungle for 3 days I stayed in a hut, a comfortable one. Never got ripped off very bad, never lost valuables, never got raped or something like that, never got sick because of the food. Or whatsoever.

I was going home soon. Everyone would understand, since Holanda is known as a nice place to come from. For sure sometime I will get back to see more of that beautiful continent. I had the experience I wanted, but also realised I could never live in a country so inefficient. For now I have the photos, my diary and a travel guide with personal notes to look into. And the blog I updated once in a while for my family that apparently even people outside that little town read. For me South America was the best thing to do and right now I still feel sincerely happy with all the memories. That for me is the essence of South America, something that I will remember everywhere I go: Only the good things happen if you open your heart for the unexpected.

When the end of my travels came closer, I was actually proud to say



Impressions from LED 2013

Impressions from Poker Tournament


April 2013

Working at Kleynen Consultants by Martijn SchrĂśder Martijn, former Vectum member, graduated last year and is currently working at Kleynen Consultants in Heerlen. He will tell us how he made the decision to work there, and will give us an insight into his job. Last year I did the master track Actuarial Sciences. Next to that, I worked for 2 days a week at APG in Heerlen to find out whether I really wanted to work as an actuary. I really liked this first working experience at APG. Unfortunately, the company was having some problems so they were not able to offer me a full-time position after my graduation. While I was travelling in the USA after my graduation, I received an e-mail from Prof. Antoon Pelsser who was my supervisor for the master thesis. He asked me whether I was interested in a job at Kleynen Consultants. During the job interview I got very enthusiastic about the projects Kleynen Consultants was working on. At the same time I also got the possibility to work for DSM pension fund. The work at Kleynen Consultants seemed to be more challenging, which let me decide

to choose for Kleynen Consultants. I must say, it’s a choice I don’t regret! Kleynen Consultants is a small consultancy company; at the moment, the team consists of 6 employees of which 5 are econometricians. Our clients are pension funds and insurance companies. Our work consists mainly of actuarial calculations and risk management calculations. Currently, I am mainly concerned with the risk management. Most of the risk management 31

PerVectum activities I am doing together with Antoon Pelsser, which is very interesting since he has a lot of practical experience and a lot of academic knowledge. This gives me the opportunity to learn everything about good risk management.

calculate the value of the liabilities? The main advantage of a replicating portfolio is that it is very easy to calculate a new market value of the liabilities after a change in the market. Once you have the market data and the replicating portfolio, the value can be calculated in a few seconds.

The main project I have been working on till now is the risk management of an insurance company. For this insurance company we constructed a replicating portfolio for their liabilities. A replicating portfolio consists of financial products which behave the same as the liabilities of the insurance company. Take for example an insurance company which has to pay of 1 million euro in 10 year time to their clients. This cash flow can be replicated by investing in a zero-coupon bond with a notional of 1 million euro and a maturity of 10 years. The market value of the cash flow is the same as the market value of the bond in an arbitrage free world.

The reason why calculations with a replicating portfolio are so much faster than calculations with actuarial models can be found in the nature of the insurance contracts. These contracts often contain embedded options. This means that the final payout depends for example on the inflation rate. With actuarial software you need a lot of simulations to calculate a value for such options in the insurance contract. The nice thing of a replicating portfolio is that we can put instruments into it, which depend on for example the inflation rate such as inflation-linked bonds. Once we have chosen the instruments and the corresponding notionals in a smart way, we only have to calculate the market value of these instruments. This means that we don’t need any simulation at all once we have the replicating portfolio.

The goal is to find a portfolio of instruments, which leads to exactly the same cash flows as the insurance products. If we find such a portfolio, we can use market data to calculate the value of this portfolio, and then we know the market value of the liabilities. The first question you might ask is why do you take the effort to find such a replicating portfolio, as there already exist many actuarial software packages to

With the replicating portfolio we can also do a lot of risk calculations for our clients. Under Solvency II, insurance companies need a buffer to cope with shocks in the financial markets. We can quantify the amount of capital 32

April 2013

Durf jij in het diepe pany,te it is springen? usually not so easy to find

they need for specific risk drivers such as interest rate and inflation. Furthermore, the replicating portfolio can be very helpful in constructing a portfolio which hedges market risks. So the replicating portfolio is a powerful tool in modern risk management.

the right person for your question. Another advantage is that you can clearly see the vision of the company. And if you have a nice idea yourself, you can easily put it forward during a team meeting or just during the lunch break. This is very good for your motivation to work hard and make the best of it.

I started working for Kleynen ConsulAls een snel groeiend bedrijf op het gebied van asset liability management en tants at the end of October. Very soon day to day risk management, willen wijI de beste zijn we zoek think it’s zijn. very Daarom clear by now thatop I realafterwards, I already got the opportunaar die van uitdagingen ly enjoyed the first months at Kleynen nity to collega’s join meetings and have tele-houden. Of course takes phone calls with some of the clients. Het hart van ons bedrijf is het oplossenConsultants. van problemen, waarbijitwe statesome of the times to get used to working 40 hours It is very interesting to see how they art finance, econometrie en actuariaat toepassen. Geen voorgebakken look at the risk management of the a week. Sometimes you will miss the oplossingen, maar maatwerk. Daarom zijn wij op zoek naar sterke innovators, company. Usually the clients have a days that you can stay in your bed bedie het leuk vinden om met ons nieuwe concepten te bedenken en te totally different background, so it’s a cause the lecture only starts in the afimplementeren. challenge to explain the results of the ternoon. On the other hand, it is great Wij werkentonauw samen scalato aan op alleinfl niveaus, doprofessionals work which really uences met the calculations them. This met is aeen very inbegrip van pensioenfondsbestuurders, investment bankers, a client makes. If you are nice experience, which will be useful decisions in accountants a job at Kleynen Consul-Ons forbeleggingsadviseurs, the rest of my career.actuarissen, assetinterested managers, en juristen. about my tempo ligt hoog en we zijn veeleisend. tants Maar and daarwant krijgtojeknow veel more voor terug, so far, can contact me Some people asked whether I re- eenexperiences namelijk een superme steile leercurve, heel leuk team enyou goede ally wanted to work for such a small at m.schroder@kleynen-consultants. groeimogelijkheden en arbeidsvoorwaarden. company. To be honest, I also had nl. some doubts about it when I started at Kleynen Consultants. But it really has a lot of advantages compared to a large company such as APG. First of of wil je solliciteren, neem dan contact op met prof.dr. Antoon Pelsser all,Wil it je is meer very weten easy to ask questions to dr. Ruud Kleynen. Dat telefonisch theofsenior employees. In akan large com- op nummer 045 - 571 47 83, of via e-mail of



Wanted: the SCOPE | Vectum Board 2013-2014 by Sean Telg, Michiel Lamers, Maartje Keulen & Michael Pollmann the study association. He has to overlook all tasks and projects of the association, such as keeping an eye for all upcoming activities, to be aware of the financial situation and promoting the participation of students from different years in all events. As such, assisting fellow board members in exercising their duties is one of the most important tasks of the president. Next to that, it is his responsibility to not only be aware of, but also address any (potential) problems that arise during the academic year.

The fourth block of the academic year has come to an end, which means that the time has come for us to look for our successors. Some of you may be interested in becoming part of the SCOPE | Vectum board 2013-2014. In order to give you more insight in the different board positions within our study association, we will provide you with a small overview of the tasks and responsibilities attached to each position in this article. Our association is still growing fast and together with the improvement of the SCOPE structure, there are enough challenges ahead for you that provide ample opportunities for you to develop yourself and to make a whole range of new experiences next to your studies. And of course the opportunity to have a fantastic year with a lot of fun.

A president also has his well-defined duties within the study association. He is responsible for scheduling and chairing weekly board meetings and to maintain a good relationship with fellow study associations and the university. As SCOPE | Vectum is part of the SCOPE framework, the president is expected to attend different SCOPE meetings on a regular basis. On a national level, he will take place in the monthly LOES meetings. Furthermore, it is the president’s duty to send around the commercial mailings and to organize the yearly SCOPE | Vectum Business Trip together with his

In case you have any further questions after reading this article, please feel free to approach any of us at any time during the upcoming block. President One of the main duties of the president is to ensure a good overall condition of 34

April 2013 committee. This event, taking place in block 3, has been a very popular, successful and thus important event in recent years.

like to lead a group of people? Are you not afraid to have the overall responsibility? Are you able to overcome certain challenges and to exploit certain opportunities? Then the position of president might be something for you!

What I personally liked most about my position is that you are responsible for everything. As such, you are confronted with all aspects of the association, for example external contacts, financials and the website. As such, your board position encompasses your own tasks and a little bit of the other positions as well. There is always something going on which requires your attention. In that light, you really experience how any kind of organization functions and what kind of problems may possibly arise. At times this may be a little bit stressful, but in the end you really learn a lot. It is a unique situation to develop important skills like talking in front of a big group of people, learning to point people to their responsibilities and organizing different kind of events.

Vice President As Vice-President your main responsibility is concerned with External Affairs. This means that you have to take care of maintaining relations with current sponsors and trying to attract new sponsors such that SCOPE | Vectum receives enough funds to organize all of its activities throughout the year. Basically, you are the connection between our study association and all companies. You will visit companies during the summer to introduce yourself and explain their representatives the possibilities they have to promote themselves among our members (Advertisements, Website, In-House Days and so on). You will make an offer, negotiate and hopefully set up contracts for cooperation during the academic year. For every company there’s a different approach, which makes it quite challenging.

The diversity of tasks also ensures that you meet many interesting people who all have their own opinions on certain subjects. Not only can this be very instructive, it also helps you develop your own personality further. Next to this, it is a great way to build up a personal network, which is very important nowadays.

Another big task is to organize the yearly Congress. Here, you get help of some active members who form the Congress Committee, which you will supervise. Although this activity has taken place in block 5 in the past, don’t underestimate it. Make sure to

Does this small overview of the president position appeal to you? Do you 35

PerVectum start early with organizing as it takes more time than you might think at the beginning.

write the minutes for board meetings and take care of the office(supplies). Next to this, you are the one that updates the databases, which means you have to collect details from new members and alumni.

Finally, you obviously have the task to help out your fellow board members throughout the year. At some time during the year, you are busier than the others and you will be happy for any help whereas at some other time you should help out your colleagues. For this position, you will be rather busy during the summer months and the first few months of the academic year. Whenever all potential interesting companies have been approached and contracts are signed, it generally gets calmer.

Your task that will be most time-consuming is the PerVectum. You will collect articles by talking to professors, alumni and students and take pictures at our activities. In this way you will get in contact with many different people, which I really liked. At the end of the block you must deal with the stress of the program InDesign, which you use to design the magazine. At the beginning of the year you should design board introduction cards and during the year you can also be asked to make brochures or flyers. Experience is not needed. The editing will soon get easier and you can use all your creativity.

In the end, I can say that it is a lot of fun doing these tasks. In building this connection between SCOPE | Vectum and its sponsors, you exactly get to know what interesting companies for econometricians are actually doing. Moreover, you get to know different company representatives who you try to persuade to form a cooperation. You will find yourself getting more comfortable with having such talks after a while, which improves your communication skills and is definitely of added value for future application interviews.

As secretary you are also responsible for the website. The website can easily be edited using a control panel, so you do not need to know anything about the underlying codes.. As webmaster you will mainly update events, sponsor pages and banners. Treasurer


As the position already suggests, the treasurer is responsible for all financial matters within Vectum. Most of the regular work is to keep track of the

As secretary you obviously responsible for incoming post and email, you 36

April 2013 APPLY NOW!

cash flows and to make sure the bookkeeping is up-to-date. Also, you make budgets on regular basis and check that all money is received.

We are looking forward to receiving motivated applications for the four available board positions. If you are interested in becoming part of the SCOPE | Vectum 2013-2014 board, send a motivation letter and your CV to The deadline for applying is the 21th of May. Take your chance‌ and if you have questions, feel free to approach us!

Next to the regular treasurer part, you are also in charge of our weekly activities. As head of the Activities Committee, you can use your creativity to come up with interesting ideas and organize a variety of activities together with your committee. Furthermore, you have meetings with your counterparts from the other SCOPE associations every few weeks to organize small and big events, e.g. the Winterball.



Upcoming Events April 16th Research Lecture & Block Drink

To start off the new block, we will hold our last research lecture of the academic year. Afterwards, we will go to the Preuverij for our usual block drink together with the other SCOPE associations.

April 18st LaTeX workshop

If you need to write your thesis or a paper, this introductory workshop to LaTeX is right for you.

April 23st Karting On April 23, members of SCOPE | Vectum will have the opportunity to go Karting. More information will follow soon. May 2nd SCOPE | Vectum Congress

On the 2nd of May, the annual congress will be held. During that day, you will be able to attend company presenÂŹtations, solve a case and finally have a somewhat informal dinner with the participating companies.

May 7th Beer Tasting Did you ever want to learn even more about your favorite drink? On May 7, we will hear about and try out several interesting beers. May 14th CV training On May 14, we will have a CV training. More information will follow soon. June 14th - 16th Members' Weekend After the resit week, we will go to Belgium for an amazing weekend full of fun, drinks, and interesting activities. More information and subscription will soon be available on our website, so make sure to save the date. Dates may be subject to changes. Please check for updated information and subscription forms.


April 2013

Treed in de voetsporen van Johan de Witt “In een snel veranderende wereld, met financiële risico's en een groeiende behoefte aan meer creatieve manieren om deze aan te pakken, zijn er voortdurend mogelijkheden voor persoonlijke en professionele groei.”

Waarom kiezen voor een actuariële vervolgstudie? Waarom actuarieel professional worden? > Je wilt werken bij een verzekeraar, pensioenfonds, financiële onderneming waar risicomanagement een belangrijke rol speelt, of voor een adviesbureau waar je klanten adviseert over verschillende vormen van risicomanagement. > Jouw unieke vaardigheden dragen bij aan strategische beslissingen die door financiële ondernemingen maar ook door overheden worden genomen. > Het beroep van actuaris werd in 2012, maar ook in 201 1 en 2010, gekozen tot de meest ideale baan met een goede ‘life balance’ (Studie&Werk, Elsevier en SEO, juni 2012).

Wat biedt het Actuarieel Instituut > Verschillende parttime opleidingen op diverse niveaus, die de combinatie werken en leren mogelijk maakt. > De mogelijkheid tijdens de opleiding door te ontwikkelen, doordat theorie vrijwel direct in praktijk toegepast kan worden. > Uitstekende opleidingsfaciliteiten, docenten en experts uit het beroepenveld.

Actuarieel Instituut Voor meer informatie over de opleidingen van het AI kunt u terecht op of neem contact op met Sandra Oudejans op telefoonnummer 030-686 61 57 of per e-mail


Durf jij in het diepe te springen?

Als een snel groeiend bedrijf op het gebied van asset liability management en day to day risk management, willen wij de beste zijn. Daarom zijn we op zoek naar collega’s die van uitdagingen houden. Het hart van ons bedrijf is het oplossen van problemen, waarbij we state of the art finance, econometrie en actuariaat toepassen. Geen voorgebakken oplossingen, maar maatwerk. Daarom zijn wij op zoek naar sterke innovators, die het leuk vinden om met ons nieuwe concepten te bedenken en te implementeren. Wij werken nauw samen met een scala aan professionals op alle niveaus, met inbegrip van pensioenfondsbestuurders, investment bankers, beleggingsadviseurs, actuarissen, asset managers, accountants en juristen. Ons tempo ligt hoog en we zijn veeleisend. Maar daar krijg je veel voor terug, namelijk een super steile leercurve, een heel leuk team en goede groeimogelijkheden en arbeidsvoorwaarden.

Wil je meer weten of wil je solliciteren, neem dan contact op met prof.dr. Antoon Pelsser of dr. Ruud Kleynen. Dat kan telefonisch op nummer 045 - 571 47 83, of via e-mail of

PerVectum 2012/2013 issue 3