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.     

Welfare analysis under uncertainty

This article extends Bergsonian welfare analysis to an environment of uncertainty where preferences are not expected utility and may even be state-inconsistent. Given state-inconsistent preferences, the familiar notion of ex ante efficiency is also state-inconsistent. Other efficiency and welfare concepts achieve state consistency by ignoring entirely the prospective preferences of consumers. The framework developed in this article allows welfare judgments to be state-consistent while respecting prospective and conditional preferences. The theory is called inclusive welfare. An application to optimum insurance subsidies illustrates the practical use of the concept.     

Shared Outrage and Erratic Awards: The Psychology of Punitive Damages

An experimental study of punitive damage awards in personal injury cases was conducted, using jury-eligible respondents. There was substantial consensus on judgments of the outrageousness of a defendant's actions and of the appropriate severity of punishment. Judgments of dollar awards made by individuals and synthetic juries were much more erratic. These results are familiar characteristics of judgments made on unbounded magnitude scales. The degree of harm suffered by the plaintiff and the size of the firm had a pronounced effect on awards. Some judgmental tasks are far easier than others for juries to perform, and reform possibilities should exploit this fact.     

Micro‐situational Foundations of Social Structure: An Interactionist Exploration of Affective Sanctioning

Micro‐interaction dynamics of affective sanctioning have been widely acknowledged but rarely related to the emergence of social phenomena. This paper aims to highlight the constitutive force of interaction activity by critically analysing two sociological models, Bourdieu's theory of practice and Barnes's Performative Theory of Social Institutions (PTSI). Such a comparison allows me to reveal two differing models of social phenomena currently operating in sociological debates: an extrinsic structuralist model which tacitly conveys macro‐structural phenomena as prior and determinant of individuals and their micro‐interactions, and an intrinsic structuralism model which prioritizes individuals’ interactions and conceives them as constituting both the individual and the structural. I argue that the latter's emphasis on the dynamics of mutual susceptibility to affective sanctioning as underpinning consensus among inherently heterogeneous individuals provides a platform to further support the tenets of Interactionism and helps to expose Bourdieu's over‐deterministic methodological individualism prevalent in most sociological theory. I conclude that by conceiving emotions as causal, rather than the effect of social forces, sociological theory can provide an explanation of both individual practices and systemic phenomena which resolves macro‐structural tensions. In doing so, I suggest an ontological understanding of the “social” which supports the Interactionist central tenet that the local takes priority over wider structural phenomena.     

Regional coordination of European environmental policies

Over the last years the European Union (EU) has implemented ambitious climate and energy targets for 2020, i.e. the 2020 Climate and Energy Package (Package), to become a highly efficient, low carbon economy. The Package assigns binding renewable energy sources (RES) target for each EU member countries. Indeed costs to reach Package's targets vary among EU countries, given heterogeneity among regions and different instruments implemented to spur RES deployment. The aim of our paper is to provide a policy tool for EU policy makers in the negotiation process that assigns achievable quantitative targets according to which countries are not inclined to deviate from the agreement.We compute potential extra costs that may arise when some EU countries fail to reach the assigned objective within the Package with reference to RES target. More generally, our simulation model is an instrument that allows EU policy makers to assess incentives that countries might have to participate or not to the environmental agreements. Our analysis shows that partial participation to the Package produces inefficiencies by rising costs for other participating countries to the environmental agreement. Finally, we propose a new policy mechanism based on progressive sanctions for countries that do not meet their national targets, which are proportional to the monetary value of the penalty they impose to the rest of the EU countries with their opportunistic behavior.     

Reactions to research participation in vulnerable subgroups

This paper describes the extent to which vulnerable individuals (defined by economic, social, psychological, physical health, and child maltreatment status) react to research participation. As part of an ongoing longitudinal study, participants (N=896) completed a lengthy and intrusive in-person interview and provided a small amount of blood through finger pricks. At the end of the interview, participants were asked eight questions about their reactions to the research experience. Vulnerable individuals in general agreed more strongly about having an emotional reaction, but were not less willing to continue to participate. In addition, psychologically vulnerable individuals more strongly agreed they would continue to participate, were treated with respect and dignity, and found their participation meaningful. Compared to whites, nonwhites reported stronger agreement about the meaningfulness of the research and the belief that their responses would be kept private. Like others, individuals vulnerable by virtue of their prisoner status or homelessness (past or current) agreed more strongly about having an emotional reaction to the interview, but otherwise did not differ in their reactions. These results suggest that researchers and institutional review boards should not be deterred from conducting research on sensitive topics with potentially vulnerable populations.     

Reactions to Research Participation in Vulnerable Subgroups

This paper describes the extent to which vulnerable individuals (defined by economic, social, psychological, physical health, and child maltreatment status) react to research participation. As part of an ongoing longitudinal study, participants (N = 896) completed a lengthy and intrusive in-person interview and provided a small amount of blood through finger pricks. At the end of the interview, participants were asked eight questions about their reactions to the research experience. Vulnerable individuals in general agreed more strongly about having an emotional reaction, but were not less willing to continue to participate. In addition, psychologically vulnerable individuals more strongly agreed they would continue to participate, were treated with respect and dignity, and found their participation meaningful. Compared to whites, nonwhites reported stronger agreement about the meaningfulness of the research and the belief that their responses would be kept private. Like others, individuals vulnerable by virtue of their prisoner status or homelessness (past or current) agreed more strongly about having an emotional reaction to the interview, but otherwise did not differ in their reactions. These results suggest that researchers and institutional review boards should not be deterred from conducting research on sensitive topics with potentially vulnerable populations.     

Assessing small non-zero perceptions of chance: The case of H1N1 (swine) flu risks

Feelings of invulnerability, seen in judgments of 0% risk, can reflect misunderstandings of risk and risk behaviors, suggesting increased need for risk communication. However, judgments of 0% risk may be given by individuals who feel invulnerable, and by individuals who are rounding from small non-zero probabilities. We examined the effect of allowing participants to give more precise responses in the 0–1% range on the validity of reported probability judgments. Participants assessed probabilities for getting H1N1 influenza and dying from it conditional on infection, using a 0–100% visual linear scale. Those responding in the 0–1% range received a follow-up question with more options in that range. This two-step procedure reduced the use of 0% and increased the resolution of responses in the 0–1% range. Moreover, revised probability responses improved predictions of attitudes and self-reported behaviors. Hence, our two-step procedure allows for more precise and more valid measurement of perceived invulnerability.     

A Unified Bayesian Decision Theory

This paper provides new foundations for Bayesian Decision Theory based on a representation theorem for preferences defined on a set of prospects containing both factual and conditional possibilities. This use of a rich set of prospects not only provides a framework within which the main theoretical claims of Savage, Ramsey, Jeffrey and others can be stated and compared, but also allows for the postulation of an extended Bayesian model of rational belief and desire from which they can be derived as special cases. The main theorem of the paper establishes the existence of a such a Bayesian representation of preferences over conditional prospects, i.e. the existence of a pair of real-valued functions respectively measuring the agent’s degrees of belief and desire and which satisfy the postulated rationality conditions on partial belief and desire. The representation of partial belief is shown to be unique and that of partial desire, unique up to a linear transformation.     

Seeing The World Through Rose‐colored Glasses? Neglect of Consensus Information in Young Children's Personality Judgments

The present study examined the use of consensus information in early childhood. Ninety‐six three‐ to six‐year‐olds watched a demonstration that depicted the positive or negative behavior of one or several actors toward a recipient (low vs. high consensus, respectively). Subsequently, participants made behavioral predictions and personality judgments about the actors and recipients. Participants viewed all story characters favorably and were reluctant to assign blame for negative outcomes, although the appropriate use of consensus information increased with age for behavioral predictions. These findings suggest that there is a positivity bias in young children's personality judgments even in the face of explicit contradictory behavioral evidence. Children's early ‘theory of personality’ is apparently driven by a baseline assumption that people are nice.     

The Hysteresis Effect: Theorizing Mismatch in Action

Widespread reliance on representationalist understandings commit social scientists to either partially or totally decouple belief from reality, limiting the domain of phenomena that can be treated by belief as an analytic concept. Developing the contrastive notion of practical belief, we introduce the hysteresis effect as a situational phenomenon involving the systematic production of agent‐environment mismatches and argue for its placement as a central problem for the theory of action. Revealing the dynamic, embodied conservation of belief in the temporality of practice, hysteresis appears when environmental contexts change in a way that leaves actors without an ontologically complicit relationship to institutions as scaffolds of action. Under these circumstances, a past‐inflected reflexiveness replaces a forward‐inflecting practical belief in the actor's temporal relation to the world. Drawing from a variety of historical case studies, we locate hysteresis in routine disjunctures between the temporality of practice and the temporality of environments. Our analysis reveals four distinct types of reflexiveness produced the hysteresis effect, each with a unique dispositional impact on actors and extensions to group‐level phenomena. We conclude the article by emphasizing the non‐eliminativist relationship between belief as disposition and belief as representation.     

Rational beliefs in extensive games

Given an extensive game, with every node x and every player i a subset k _i (x) of the set of terminal nodes is associated, and is given the interpretation of player i's knowledge (or information) at node x. A belief of player i is a function that associates with every node x an element of the set K _i (x). A belief system is an n-tuple of beliefs, one for each player. A belief system is rational if it satisfies some natural consistency properties. The main result of the paper is that the notion of rational belief system gives rise to a refinement of the notion of subgame-perfect equilibrium.     

Hear No Evil, See No Evil? Associations of Gender, Trauma History, and Values with Believing Trauma Vignettes

Attitudes and beliefs about sexual assault in general influence judgments about the veracity of specific sexual assault reports and disclosures ( Taylor, 2007 ). The present study investigated the impact of gender, personal trauma history, and beliefs about gender and child sexual abuse (CSA) on judgments of the veracity of CSA disclosures. The study also examined judgments about other kinds of trauma disclosures using a variety of different types of trauma vignettes. Men were found to be more skeptical than women, and those who reported no trauma history were less likely than those who reported a trauma history to believe disclosures. Overall, all participants were more skeptical about CSA disclosures than disclosures about other kinds of trauma. Sexism and belief in CSA myths (CSAMs) were negatively related to believing adults' retrospective CSA disclosures. In a series of regression analyses, we observed that belief in CSAMs moderated the negative association between sexist attitudes and believing disclosures. Implications for educating professionals are discussed .     

Inequality and Political Consensus

This paper develops a model of political consensus in order to explain the missing link between inequality and political redistribution. Political consensus is an implicit agreement not to vote for extreme policy proposals. We show that such an agreement may play an efficiency-enhancing role. Voters anticipate that voting for extremist parties increases policy uncertainty in the future. A political consensus among voters reduces policy uncertainty because self-interested politicians propose non-discriminatory policies. We study how much inequality can be sustained in a democracy and how the limits to redistribution vary with initial inequality. The bounds of the set of political equilibria may react in a fundamentally different manner to changes in exogenous variables than do the policy variables in the one-dimensional, one-shot game. More initial inequality need not lead to more redistribution from the rich to the poor. The maximum amount of redistribution decreases with inequality if (and only if) agents are sufficiently patient. In this case inequality is politically self-sustaining.     

Consensus for belief functions and related uncertainty measures

We extend previous work of Lehrer and Wagner, and of McConway, on the consensus of probabilities, showing under axioms similar to theirs that (1) a belief function consensus of belief functions on a set with at least three members and (2) a belief function consensus of Bayesian belief functions on a set with at least four members must take the form of a weighted arithmetic mean. We observe that these results are unchanged when consensual uncertainty measures are allowed to take the form of Choquet capacities of low order monotonicity.This work was supported in part by a grant from the University of Tennessee Artificial Intelligence Group, and by the U.S. Naval Sea Systems Command, through a grant to Oak Ridge National Laboratory.     

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.     

中国公众的收入公平感:一种新制度主义社会学的解释

借助“嵌入性”和“合法性”概念,本文将关于社会公平感形成的基本共识理论与自我评价理论整合起来,提出了一种关于分配公平感的新制度主义社会学解释。本文认为,社会成员对自己所获得的社会资源是否公平的感受取决于社会成员的自我认知与社会共识之间达成一致的程度。当自我感知的地位低于社会评价的地位时,个体倾向于认为自己所得到的社会资源是不公平的;相反,当自我感知的地位与社会评价地位一致或更高时,个体则更有可能认为自己所得到的社会资源是公平的。基于上述命题,本文进一步提出研究假设,相对于主观阶层地位达到或高于其职业声望者,主观阶层地位低于其职业声望的人更倾向于认为自己的收入是不公平的。对2006年中国综合社会调查(CGSS2006)数据的分析结果较有力地支持了这一研究假设;研究结果表明,本文所提出的理论命题比基于理性选择的自利理论更好地解释了为什么社会成员,尤其是社会经济地位较低者,依然会认为自己的收入是公平的。     

A Model of Minimal Probabilistic Belief Revision

In the literature there are at least two models for probabilistic belief revision: Bayesian updating and imaging [Lewis, D. K. (1973), Counterfactuals, Blackwell, Oxford; Gärdenfors, P. (1988), Knowledge in flux: modeling the dynamics of epistemic states, MIT Press, Cambridge, MA]. In this paper we focus on imaging rules that can be described by the following procedure: (1) Identify every state with some real valued vector of characteristics, and accordingly identify every probabilistic belief with an expected vector of characteristics; (2) For every initial belief and every piece of information, choose the revised belief which is compatible with this information and for which the expected vector of characteristics has minimal Euclidean distance to the expected vector of characteristics of the initial belief. This class of rules thus satisfies an intuitive notion of minimal belief revision. The main result in this paper is to provide an axiomatic characterization of this class of imaging rules.