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Why Are Values Obtained from the Ho-Lee Model Generally Higher

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Why are values obtained from the Ho-Lee model generally higher than does obtained from the Vasicek model?


Definitions:

Hawk-Dove Game

A model in game theory representing conflicts of interest between parties who can choose between cooperative (dove) and aggressive (hawk) strategies.

Proportion

A part or portion of a whole, often expressed as a fraction, percentage, or ratio, indicating the relative size of one quantity to another.

Payoff

The expected financial returns or benefits received from an investment, decision, or action.

Long-Run Equilibrium

A state in which all firms in a market are making normal profits, with no incentive to enter or exit the market.

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