Inferring beliefs as subjectively imprecise probabilities

We propose a method for estimating subjective beliefs, viewed as a subjective probability distribution. The key insight is to characterize beliefs as a parameter to be estimated from observed choices in a well-defined experimental task and to estimate that parameter as a random coefficient. The experimental task consists of a series of standard lottery choices in which the subject is assumed to use conventional risk attitudes to select one lottery or the other and then a series of betting choices in which the subject is presented with a range of bookies offering odds on the outcome of some event that the subject has a belief over. Knowledge of the risk attitudes of subjects conditions the inferences about subjective beliefs. Maximum simulated likelihood methods are used to estimate a structural model in which subjects employ subjective beliefs to make bets. We present evidence that some subjective probabilities are indeed best characterized as probability distributions with non-zero variance.     

Probability and logic in belief systems

This paper seeks to develop a formal (mathematical) model of belief systems based on the axioms of probability theory and propositional logic. By a belief system we mean a set of propositions along with an actor's objective probability assignments to (beliefs in) them, together with the relationships among and between propositions and beliefs. Belief systems are regarded as being comprised of interrelated elements.In the paper are developed measures of the distance between sets of beliefs; of the congruence, coherence, and consistency of belief systems; and of the degree of polarization of belief systems-which are derived from one basic operation, symmetric difference.We show that these measures possess a number of useful and powerful mathematical properties. Also, a model is set forth by which, from an actor's subjective probability assignment to propositions and pairwise conjunctions of propositions, we may then impute to the actor subjectively perceived truth functional relationships between proposition.The potential uses and practical difficulties with the approach taken in the paper are also discussed, and the assertion is made that the measures developed enable us to simply distinguish between certain notions (e.g., congruence, consistency, coherence) too often and easily confused, provide us with the possibility of interval (or at least, quasi-interval level) measurement of certain properties of individual belief systems, and also allows us to make comparisons between the structures of different actors' belief systems.An earlier version of this paper was delivered at the 1969 American Political-Science Association, Chicago.     

Uncertain discount and hyperbolic preferences

This paper studies the interaction between savagean uncertainty and time preferences. We introduce a variation of the discounted subjective expected utility model, where time preferences are state dependent. Before uncertainty is resolved, the individual is unsure about the discount factor that will be used, even when evaluating certain payoffs. The model can account for the present bias and diminishing impatience, even if the future is discounted geometrically. The present bias disappears when the immediate payoff becomes uncertain. Although preferences are not stationary, choices may be time consistent.     

Towards a Dynamic Model of the Psychological Contract

This paper presents a dynamic perspective in which the psychological contract is treated as a structured set of beliefs that are held by individual employees about the mutual obligations of the organization as employer and themselves as employees. This set of beliefs is assumed to produce a state of commitment to the organization in which the employee is willing to accept work roles and tasks offered by the organization, and to carry them out in accordance with certain standards. The dynamic model that is presented can help to explain why the commitment of employees remains relatively stable over time, and why it may suddenly decrease or increase under circumstances that are perceived as critical by the employee. The model assumes that the employee's evaluation of the organization's behavior changes over time, but that the structure of the psychological contract and the associated commitment change only when certain limits are overstepped. This perspective on changes in the psychological contract transforms the concept into a powerful construct that may lead to fruitful research on the dynamics of organization‐employee relationships. Implications for future research are discussed.     

Bayesian boundedly rational agents play the Finitely Repeated Prisoner's Dilemma

In this paper a model of boundedly rational decision making in the Finitely Repeated Prisoner's Dilemma is proposed in which: (1) each player is Bayesianrational; (2) this is common knowledge; (3) players are constrained by limited state spaces (their Bayesian minds) in processing (1) and (2). Under these circumstances, we show that cooperative behavior may arise as an individually optimal response, except for the latter part of the game. Indeed, such behaviorwill necessarily obtain in long enough games if belief systems satisfy a natural condition: essentially, that all events consistent with the players' analysis of the game be attributed by them positive (although arbitrarily small) subjective probability.     

Deterring domestic violence: Do criminal sanctions reduce repeat offenses?

This study presents an empirical analysis of domestic violence case resolution in North Carolina for the years 2004 to 2010. The key hypothesis is that penalties at the level set for domestic violence crimes reduce recidivism (re-arrest on domestic violence charges or conviction in 2 years following an index arrest). We use state court data for all domestic violence-related arrests. Decisions to commit an act of domestic violence are based on a Bayesian process of updating subjective beliefs. Individuals have prior beliefs about penalties for domestic violence based on actual practice in their areas. An individual’s experience with an index arrest leads to belief updating. To address endogeneity of case outcomes, we use an instrumental variables strategy based on decisions of prosecutors and judges assigned to each index arrest in our sample. Contrary to our hypothesis, we find that penalities, at least as set at the current levels, do not deter future arrests and convictions.     

Social Darwinist aspects of utility and probability

Utility and subjective probability are assessed from a normative social darwinist viewpoint. It is shown that utility is essentially equal to monetary reward and that probability must satisfy a reasonable frequency criterion.     

De Finetti was Right: Probability Does Not Exist

De Finetti's treatise on the theory of probability begins with the provocative statement PROBABILITY DOES NOT EXIST, meaning that probability does not exist in an objective sense. Rather, probability exists only subjectively within the minds of individuals. De Finetti defined subjective probabilities in terms of the rates at which individuals are willing to bet money on events, even though, in principle, such betting rates could depend on state-dependent marginal utility for money as well as on beliefs. Most later authors, from Savage onward, have attempted to disentangle beliefs from values by introducing hypothetical bets whose payoffs are abstract consequences that are assumed to have state-independent utility. In this paper, I argue that de Finetti was right all along: PROBABILITY, considered as a numerical measure of pure belief uncontaminated by attitudes toward money, does not exist. Rather, what exist are de Finetti's `previsions', or betting rates for money, otherwise known in the literature as `risk neutral probabilities'. But the fact that previsions are not measures of pure belief turns out not to be problematic for statistical inference, decision analysis, or economic modeling. This revised version was published online in June 2006 with corrections to the Cover Date.     

A Reason to Believe: Examining the Factors that Determine Individual Views on Global Warming*

Objectives. In this article we examine the causes of both belief and disbelief in global warming among adult Americans. Methods. We use national‐ and state‐level telephone surveys to collect data on individual‐level beliefs regarding climate change and employ ordered logistical regression to measures the relative effect of various factors on those beliefs. Results. The study finds that U.S. views on climate change are being shaped by a combination of personal observations, meteorological events, and physical changes on the planet. The impact of various factors on one's belief in global warming are significantly determined by partisan affiliation, with Democrats and Republicans responding differently to assorted types of evidence. Conclusion. Beliefs regarding global warming are being shaped by individual experiences and weather phenomenon and the processing of such factors is substantially influenced by a person's partisan leanings.     

The relationship between individual expectations and behaviors: Mortality expectations and smoking decisions

Using data from the Health and Retirement Study, we assess the accuracy of subjective beliefs about mortality and objectively estimated probabilities for individuals in the same sample. Overall, subjective beliefs and objective probabilities are very close. However, there are differences conditional on behaviors, with current smokers being relatively optimistic and never smokers relatively pessimistic in their assessments. In the aggregate, individuals accurately predict longevity, but at the individual level, subjective beliefs provide information in addition to the estimated objective probabilities in predicting actual events, which may arise from the effect of past or anticipated decisions on these beliefs.

The Likelihood Method for Decision under Uncertainty

This paper introduces the likelihood method for decision under uncertainty. The method allows the quantitative determination of subjective beliefs or decision weights without invoking additional separability conditions, and generalizes the Savage–de Finetti betting method. It is applied to a number of popular models for decision under uncertainty. In each case, preference foundations result from the requirement that no inconsistencies are to be revealed by the version of the likelihood method appropriate for the model considered. A unified treatment of subjective decision weights results for most of the decision models popular today. Savage’s derivation of subjective expected utility can now be generalized and simplified. In addition to the intuitive and empirical contributions of the likelihood method, we provide a number of technical contributions: We generalize Savage’s nonatomiticy condition (“P6”) and his assumption of (sigma) algebras of events, while fully maintaining his flexibility regarding the outcome set. Derivations of Choquet expected utility and probabilistic sophistication are generalized and simplified similarly. The likelihood method also reveals a common intuition underlying many other conditions for uncertainty, such as definitions of ambiguity aversion and pessimism.     

Are people overoptimistic about the effects of heavy drinking?

We test whether heavy or binge drinkers are overly optimistic about probabilities of adverse consequences from these activities or are relatively accurate about these probabilities. Using data from a survey in eight cities, we evaluate the relationship between subjective beliefs and drinking. We assess accuracy of beliefs about several outcomes of heavy/binge drinking: reduced longevity, liver disease onset, link between alcohol consumption and Driving While Intoxicated (DWI), probability of an accident after drinking, accuracy of beliefs about encountering intoxicated drivers on the road, and legal consequences of DWI—ranging from being stopped to receiving fines and jail terms. Overall, there is no empirical support for the optimism bias hypothesis. We do find that persons consuming a lot of alcohol tend to be more overconfident about their driving abilities and ability to handle alcohol. However, such overconfidence does not translate into over-optimism about consequences of high levels of alcohol consumption.     

Whom should we believe? Aggregation of heterogeneous beliefs

We examine the collective risk attitude of a group with heterogeneous beliefs. We prove that the wealth-dependent probability distribution used by the representative agent is biased in favor of the beliefs of the more risk tolerant consumers. Moreover, increasing disagreement on the state probability raises the state probability of the representative agent. It implies that when most disagreements are concentrated in the tails of the distribution, the perceived collective risk is magnified. This can help to solve the equity premium puzzle. We show that the trade volume and the equity premium are positively correlated.

“福柯在叙拉古”:“政治精神性”中的主体性实践

福柯对伊朗革命持支持立场而被人称为他的“叙拉古问题”。他为伊朗革命中的“政治精神性”所着迷，然而遭到了知识界众多批评和指责。本文尝试理解“政治精神性”，并对福柯所持的赞许态度做出明证。通过分析福柯1978年以及之后的思想著作，文章试图阐明福柯支持“政治精神性”的两种层面，它体现出人的集体意志和超越世俗性的力量，在福柯眼中它们就是反抗西方理性政治的有力武器。加上福柯对多元文化的偏好，造就了他对伊朗革命的支持态度。“政治精神性”同时联系起了福柯思想中后期从政治到主体的两大元素，他从政治领域的“生命政治”到伦理领域的“自我技术”，都在探究个人如何转变其自身主体性，并沿着主体性实践开展他的现代性研究。福柯并非完全正确，但他借伊朗革命所体现的政治精神性，为公共政治领域讨论提供了一种主体性实践视角的新立场。     

Risk aversion in expected intertemporal discounted utilities bandit problems

We consider a situation where an individual is facing an uncertain situation, but may costly alter his knowledge of the uncertainties. We study in this context how risk aversion may modify the individual search behavior. We consider a one-armed bandit problem (where one arm is safe and the other is risky) and study how the agent risk aversion can change the sequence of arms selected. The main result is that when the utility function is more concave, the agent has more chances to select the safe arm. We also discuss how search is affected by risk aversion.     

Effective workload management in child welfare: Understanding the relationship between caseload and workload

A common assumption in public social service organizations is that workload may be positively associated with caseload. However, few empirical studies have examined what specific characteristics of caseload affect caseworkers' workloads in the child welfare system. This study attempts to address this gap by identifying specific individual and regional factors that influence both subjective and objective dimensions of workloads. Survey data were collected from 1,244 caseworkers at one public child welfare agency in a Midwestern state in the United States. The data indicated that both perceptions of unmanageable workloads and self‐reported overtime work were significantly higher when caseworkers had a greater number of cases than the state caseload standard for the investigations units and worked with at least two different types of cases simultaneously (e.g., working with both investigation and ongoing service cases). Additionally, sufficient staffing numbers to meet caseload demands at the regional level significantly decreased the odds ratio of having to do overtime work. The major findings suggest that the objective and subjective dimensions of workload vary by individual‐ and regional‐level variables. Practice implications are discussed for effective and efficient workload management in the public child welfare system.     

A deterministic event tree approach to uncertainty,randomness and probability in individual chance processes

Both Popper and Good have noted that a deterministic microscopic physical approach to probability requires subjective assumptions about the statistical distribution of initial conditions. However, they did not use such a fact for defining an a priori probability, but rather recurred to the standard observation of repetitive events. This observational probability may be hard to assess for real-life decision problems under uncertainty that very often are - strictly speaking - non-repetitive, one-time events. This may be a reason for the popularity of subjective probability in decision models. Unfortunately, such subjective probabilities often merely reflect attitudes towards risk, and not the underlying physical processes.In order to get as objective as possible a definition of probability for one-time events, this paper identifies the origin of randomness in individual chance processes. By focusing on the dynamics of the process, rather than on the (static) device, it is found that any process contains two components: observer-independent (= objective) and observer-dependent (= subjective). Randomness, if present, arises from the subjective definition of the rules of the game, and is not - as in Popper's propensity - a physical property of the chance device. In this way, the classical definition of probability is no longer a primitive notion based upon equally possible cases, but is derived from the underlying microscopic processes, plus a subjective, clearly identified, estimate of the branching ratios in an event tree. That is, equipossibility is not an intrinsic property of the system object/subject but is forced upon the system via the rules of the game/measurement.Also, the typically undefined concept of symmetry in games of chance is broken down into objective and subjective components. It is found that macroscopic symmetry may hold under microscopic asymmetry. A similar analysis of urn drawings shows no conceptual difference with other games of chance (contrary to Allais' opinion). Finally, the randomness in Lande's knife problem is not due to objective fortuity (as in Popper's view) but to the rules of the game (the theoretical difficulties arise from intermingling microscopic trajectories and macroscopic events).Dedicated to Professor Maurice Allais on the occasion of the Nobel Prize in Economics awarded December, 1988.     

Concern about the rise of lazy welfare queens? An empirical explanation of the underdevelopment of the redistributive welfare system in South Korea

This study investigates why South Korea has maintained a minimalist welfare state with little redistribution of income. Inspired by the behavioral/attitudinal approach of Alesina and his colleagues, this study focuses on the perception that people who do not work become lazy. This belief is related to the anti-welfare sentiment that non-working benefits encourage laziness. This study shows that perceptions of work and laziness are associated with preferences for redistribution, not only among South Koreans, but also among individuals in Organization for Economic Cooperation and Development (OECD) member countries. Further, such perceptions are also associated with the redistribution policies chosen in a country. This study provides evidence that societal beliefs about work and laziness, along with several other political and economic factors, such as pre-tax income inequality, political institutions, and union density, may explain the small-scale redistribution in South Korea.     

国家还是市场:城镇化进程中流动人口的市场转型偏好

以往关于中国市场转型的研究通常关注转型的过程及其后果,却较少注意人们的主观意愿。在城镇化背景下,流动人口对市场转型的态度是其选择和行动的基础,这将会影响城镇化与市场化的发展。本文通过分析2012年“城镇化与劳动力移民”调查数据发现,与本地居民相比,流动人口表现出更强烈的市场转型偏好,且这种偏好倾向随世代推移呈现增强趋势。研究还发现,“城城”流动人口比城乡流动人口更支持市场转型,流动人口内部存在显著分化。本文认为,结构性因素与认知性因素是市场转型偏好分化的重要原因。城镇内部的二元隔离是流动人口无法充分获得市场化红利的根本原因,唯有改变这一状况,才能消解流动人口与本地居民在态度上的隔膜。     

Uncommon Priors Require Origin Disputes

In standard belief models, priors are always common knowledge. This prevents such models from representing agents’ probabilistic beliefs about the origins of their priors. By embedding standard models in a larger standard model, however, pre-priors can describe such beliefs. When an agent’s prior and pre-prior are mutually consistent, he must believe that his prior would only have been different in situations where relevant event chances were different, but that variations in other agents’ priors are otherwise completely unrelated to which events are how likely. Due to this, Bayesians who agree enough about the origins of their priors must have the same priors.