A further exploration of the uncertainty effect

Individual valuation of a binary lottery at values less than the lottery’s worst outcome has been designated as the “uncertainty effect”. Our paper aims to explore the boundary conditions of the uncertainty effect by investigating a plausible underlying process and proposing two possible methods. First, we examine how providing an exogenous evaluation opportunity prior to judging the value of the lottery affects individuals’ judgments, and find that first valuing the worst outcome and then the lottery eliminates the uncertainty effect. Second, we explore whether introducing additional cognitive load dampens how far decision makers correct their initial evaluations, and find that additional cognitive load is able to eliminate the uncertainty effect.     

Choice under complete uncertainty when outcome spaces are state dependent

One central objection to the maximin payoff criterion is that it focuses on the state that yields the lowest payoffs regardless of how low these are. We allow different states to have different sets of possible outcomes and show that the original axioms of Milnor (1954) continue to characterize the maximin payoff criterion, provided that the sets of payoffs achievable across states overlap. If instead payoffs in some states are always lower than in all others then ignoring the “bad” states is no longer inconsistent with these axioms. Similar dependence on overlap of outcome spaces across states holds for the minimax regret and maximin joy criteria.      

浅析城镇职工基本养老保险制度存在的问题

经过十几年的不断探索和总结，我国的城镇养老保险制度由80年代中后期的个别城市试点到现在的全国推广展开，已经形成了一个初具轮廓的、全国统一的公共养老保险计划目标模式。这一养老保险制度最初是由各省、直辖市根据95年国家颁发的《国……     

Controlling for initial endowment and experience in binary choice tasks

Learning literature typically assumes that initial attractions to choose each possible alternative are given exogenously. However, evidence shows that current behaviour depends on past experiences. In this paper, we design an experiment to control for the initial experience in decisions from experience by providing decision makers with an exogenous history (successful vs. unsuccessful) prior to initiating the decision task. Moreover, varying the initial endowment level for fixed histories we investigate the income effect. We are also interested in analysing the duration of both effects (history and income). We find significant treatment effects in the sense that more risk taking behaviour is associated with good histories and with low income levels. According to previous literature, our results confirm the transitory nature of both effects, although the duration of the income effect doubles the duration of the history effect. In the long run, risky choice behaviour converges across different treatments.     

Cognition and uncertainty

In the first part, we try to give a representation of the process by which man endeavours to grasp uncertainty. We propose a backward exploration which we will modelize through an influence diagram and then we can draw a few conclusions from that representation for the axiomatics of Decision.In the second part, we deal with the processing of the information formatted in such a way, regarding both its temporal complexity and its elective complexity.The first part as the second one dealing with representation and the consequences for information processing of uncertainty cognition lead to a severe criticism of the expected utility hypothesis.To conclude, we suggest a few remarks on expert systems of decision aid under uncertainty.     

Production under uncertainty and choice under uncertainty in the emergence of generalized expected utility theory

Theory and Decision - Interest in the foundations of the theory of choice under uncertainty was stimulated by applications of expected utility theory such as the Sandmo model of production under...     

论知识的不确定性

“确定”是指事物或过程本身的客观性 ,同时还意味着主体对客体的认识和理解程度。不确定性是指事物或过程不具有“确定”那样的性质。 2 0世纪以来 ,科学知识凸显出不确定性。之所以如此 ,一是由于它本身就具有不确定性 ,二是它受到客观世界的影响所导致     

Market uncertainty and the process of belief formation

Subjective or personal belief formation has been up to now grounded on axioms (e.g., the axioms of Savage) that can be described asintrospection axioms, for they bear only on judgments formed by the individual within himself (e.g., judgments on the ordering of the “acts” in Savage's contribution), excluding every reference to other, possibly external, sources of opinion formation. This current view, linked to the traditional concept ofinstrumental economic rationality, implicitly assumes cognitive capacities that are most of the time out of the reach of any individual. Therefore this view is little or improperly used in the practical world of economics and/or management. An alternative view of belief formation on a market is offered in this article, grounded on a much more modest demand of cognitive capacities from the individual and on a different concept of economic rationality known ascognitive rationality. The model introduces to this end the global concept of market psychology as well as the concept of regular revision of the sets of opinions. Belief formation then appears as a process of deliberation between the individual and the market, rationality emerging within this process as deeply intertwined with the way the individual revises his opinions during the process. The rational treatment of beliefs in view of reaching a decision can consequently be carefully distinguished from their rational formation process.     

Biodiversity,coastal protection and resource endowment: Policy options for improving ocean health

The paper develops a production function for the Global Ocean Health Index (OHI) for 2013. Data from the Ocean Health Statistics, plus from the Human Development Index (HDI) for 151 countries are used. We employ two-stage regression model to conduct this evaluation. The Tobit model, used to obtain the estimated dependent variable, results show Coastal Protection, Livelihoods and Economies, Tourism and Recreation, Iconic Species, Clean Water and Biodiversity, Food Provision, Artisanal Fisheries Opportunities, Natural Products, and Carbon Storage are significant variables. The rank regression in the second stage showed that HDI and Marine Protected Areas (MPAs) significantly influenced the predicted value of the OHI. Policy makers should note that biodiversity increases have the greatest effect on OHI, and its improvement is within reach of even the poorest country. Countries with varying levels of resource endowment may choose different techniques to improve OHI, but the implementation of MPAs should be priority.     

Culture and the Explanation of Choice behavior

This paper shows how alternative, culturally-determined motivational forces can be substituted for self-interest or rationality in the theory of choice. Several possibilities are considered, including the replacement of preference optimization by such propellants as the selection of the `second best' or the `central' option. It is argued that although all choice behavior, even that consistent with the alternatives considered, can ultimately be understood as satisfying the criterion of rationality, richer and more meaningful explanation is obtained by focusing on culturally significant alternative motivations when the latter turn out, in particular environments, to be more important than self-interest.     

从理性选择到社会选择

基于“理性人”(或“经济人”)的基本 假设,经济学通过对变量的严格限制而发展 了一套解释人类行动的精致理论和数学模型,并在其学科发展的进程中将其解释范围和效力从最开始的微观行动过渡到宏观结构,从最开始的经济领域逐渐扩展到了整个社会领域,从而使自己成为“显学”,构筑起了“经济学帝国主义”的大厦。社会学作为后起之秀,虽然一开始就极力反对“经济人”的假设和以理性行动涵盖人类全部行为的处理方法,坚持自己的“社会人”假设,但由于非理性行动解释的困难影响以及个体主义方法论的推动,也逐渐把理性与理性行动作为一个十分重要的分析范畴。作为研究人类社会规律的社会科学,经济学和社会学在此解     

Risk,uncertainty and hidden information

People are less willing to accept bets about an event when they do not know the true probability of that event. Such uncertainty aversion has been used to explain certain economic phenomena. This paper considers how far standard private information explanations (with strategic decisions to accept bets) can go in explaining phenomena attributed to uncertainty aversion. This paper shows that if two individuals have different prior beliefs about some event, and two sided private information, then each individuals willingness to bet will exhibit a bid ask spread property. Each individual is prepared to bet for the event, at sufficiently favorable odds, and against, at sufficiently favorable odds, but there is an intermediate range of odds where each individual is not prepared to bet either way. This is only true if signals are distributed continuously and sufficiently smoothly. It is not true, for example, in a finite signal model.     

Constraints and the Measurement of Freedom of Choice

This paper introduces considerations about constraints in the construction of measures of an agent's freedom. It starts with motivating the exercise from both the philosophical and the informational point of view. Then it presents two rankings of opportunity sets based on information about the extent of options and the constraints that a decision maker faces. The first ranking measures freedom as variety of choice; the second as non-restrictedness in choice.     

The attraction of uncertainty: Interactions between skill and levels of uncertainty in market-entry games

The experimental market entry paradigm has been used to illuminate the role of self-assessed skill in risk taking. Specifically, success only accompanies entry if a participant is one of the better ranked entrants on the skill criterion. We investigate what happens when participants face an additional source of uncertainty that perturbs relative skill rankings. Interestingly, this has asymmetric effects. On average, chances of success are increased for those with low rankings but decreased for those with high rankings. Thus, we predicted that the additional uncertainty would lead to more entry by the former but less by the latter. Our data supported the first prediction but, for those with high skill rankings, the existence of additional uncertainty made little difference. Finally, although we observed “excess entry” (i.e., too many participants entered markets), this could not be attributed to overconfidence. We conclude by contrasting our results with others in the literature.     

Perceived Hazard and Product Choice: An Application to Recreational Site Choice

We develop a "perceived hazard" model that estimates consumers' endogenous risk perceptions about products. These perceptions are then linked to a model of product choice. Our approach thus departs from the expected utility model that depends upon external risk assessments. In an application to recreational fishing, we find that anglers' perceived hazards associated with fish consumption advisories do affect product (recreational site) choice. Anglers' perceptions also affect welfare measures because the benefits of contaminant removal flow from these perceptions. The perceived hazard/product choice model is applicable to a wide variety of risky choices consumers face.     

The Collapsing Choice Theory: Dissociating Choice and Judgment in Decision Making

Decision making theory in general, and mental models in particular, associate judgment and choice. Decision choice follows probability estimates and errors in choice derive mainly from errors in judgment. In the studies reported here we use the Monty Hall dilemma to illustrate that judgment and choice do not always go together, and that such a dissociation can lead to better decision-making. Specifically, we demonstrate that in certain decision problems, exceeding working memory limitations can actually improve decision choice. We show across four experiments that increasing the number of choice alternatives forces people to collapse choices together, resulting in better decision-making. While choice performance improves, probability judgments do not change, thus demonstrating an important dissociation between choice and probability judgments. We propose the Collapsing Choice Theory (CCT) which explains how working memory capacity, probability estimation, choice alternatives, judgment, and regret all interact and effect decision quality.