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Author : Ralf Bergheim
Publisher :
ISBN 13 : 9783867885560
Total Pages : 48 pages
Book Rating : 4.8/5 (855 download)
Download or read book Information Acquisition and Decisions Under Risk and Ambiguity written by Ralf Bergheim and published by . This book was released on 2014 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Mark Machina
Publisher : Newnes
ISBN 13 : 0444536868
Total Pages : 897 pages
Book Rating : 4.4/5 (445 download)
Download or read book Handbook of the Economics of Risk and Uncertainty written by Mark Machina and published by Newnes. This book was released on 2013-11-14 with total page 897 pages. Available in PDF, EPUB and Kindle. Book excerpt: The need to understand the theories and applications of economic and finance risk has been clear to everyone since the financial crisis, and this collection of original essays proffers broad, high-level explanations of risk and uncertainty. The economics of risk and uncertainty is unlike most branches of economics in spanning from the individual decision-maker to the market (and indeed, social decisions), and ranging from purely theoretical analysis through individual experimentation, empirical analysis, and applied and policy decisions. It also has close and sometimes conflicting relationships with theoretical and applied statistics, and psychology. The aim of this volume is to provide an overview of diverse aspects of this field, ranging from classical and foundational work through current developments. Presents coherent summaries of risk and uncertainty that inform major areas in economics and finance Divides coverage between theoretical, empirical, and experimental findings Makes the economics of risk and uncertainty accessible to scholars in fields outside economics
Author : Ralf Bergheim
Publisher :
ISBN 13 :
Total Pages : 35 pages
Book Rating : 4.:/5 (13 download)
Download or read book Intuition and Reasoning in Choosing Ambiguous and Risky Lotteries written by Ralf Bergheim and published by . This book was released on 2013 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on information acquisition and individual decision making in ambiguous situations and presents a novel experimental design which may help to tackle open questions from a fresh perspective. Instead of giving subjects the choice between risky and ambiguous Ellsberg urns, we let them choose between a safe option and a risky lottery, whose risk is a priori unknown to subjects. By acquiring information about the probability distribution of the lottery's payoffs, subjects can reduce or even eliminate the ambiguity and turn the decision situation into one of risk. Under the assumption that an ambiguity averse subject should reduce ambiguity within a decision process we predicted that these subjects would request more information. Moreover, we investigate whether the relation between attitudes towards risk and ambiguity is linked to intuitive and deliberate thinking. Based on a detailed analysis of subjects' information acquisition and decision processes we do not find that those subjects showing ambiguity aversion in an urn experiment based on Halevy (2007) significantly reduce the ambiguity more than others. More intuitive subjects acquire less information and are more likely to avoid the risky lottery. Intuition seems to be negatively correlated with risk aversion, but not with ambiguity aversion. Moreover, we find a positive correlation between risk and ambiguity aversion.
Author : J. Geweke
Publisher : Springer Science & Business Media
ISBN 13 : 9780792319047
Total Pages : 282 pages
Book Rating : 4.3/5 (19 download)
Download or read book Decision Making Under Risk and Uncertainty written by J. Geweke and published by Springer Science & Business Media. This book was released on 1992-08-31 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt: As desired, the infonnation demand correspondence is single valued at equilibrium prices. Hence no planner is needed to assign infonnation allocations to individuals. Proposition 4. For any given infonnation price system p E . P (F *), almost every a E A demands a unique combined infonnation structure (although traders may be indifferent among partial infonnation sales from different information allocations, etc. ). In particular, the aggregate excess demand correspondence for net combined infonnation trades is a continuous function. Proof Uniqueness fails only if an agent can obtain the same expected utility from two or more net combined infonnation allocations. If this happens, appropriate slight perturbations of personal probability vectors destroy the equality unless the utility functions and wealth allocations were independent across states. Yet, when utilities and wealths don't depend on states in S, no infonnation to distinguish the states is desired, so that the demand for such infonnation structures must equal zero. To show the second claim, recall that if the correspondence is single valued for almost every agent, then its integral is also single valued. Finally, note that an upper hemicontinuous (by Proposition 2) correspondence which is single valued everywhere is, in fact, a continuous function. [] REFERENCES Allen, Beth (1986a). "The Demand for (Differentiated) Infonnation"; Review of Economic Studies. 53. (311-323). Allen, Beth (1986b). "General Equilibrium with Infonnation Sales"; Theory and Decision. 21. (1-33). Allen, Beth (1990). "Infonnation as an Economic Commodity"; American Economic Review. 80. (268-273).
Author : Michael Thomas Braun
Publisher :
ISBN 13 : 9781369406832
Total Pages : 114 pages
Book Rating : 4.4/5 (68 download)
Download or read book Understanding the Role of Risk and Uncertainty in Sequential Decision Making During Information Acquisition written by Michael Thomas Braun and published by . This book was released on 2012 with total page 114 pages. Available in PDF, EPUB and Kindle. Book excerpt: When employees are faced with novel situations it is often necessary for them to acquire new information. Unreliability of information sources and uncertainty regarding information usefulness make the information acquisition process analogous to a sequence of risky decisions. Prospect Theory (Kahneman & Tversky, 1979) and its generalizations are currently the dominant approach to the study of risky decision making in psychology and economics due to their ability to accurately describe the decision biases that are frequently document in the presence of risk and uncertainty. Using a lab-based computer simulation, CRONUS SOLO, common biases from the Prospect Theory literature are examined for sequential risky decision making during information acquisition. Additionally, common relationships between individual differences and sequential risky decision making as well as the effect of learning and feedback on risky decision making are explored. The biases present during the information acquisition process are not fully explained by Prospect Theory and its generalizations. Overall, individuals became more efficient and optimal decision makers over time. The effects of information reliability, information framing, and specific individual differences are presented. Finally, potential explanations for the current findings as well as implications for training are discussed. -- Abstract.
Author : Mohammed Abdellaoui
Publisher : Springer Science & Business Media
ISBN 13 : 3540684360
Total Pages : 245 pages
Book Rating : 4.5/5 (46 download)
Download or read book Advances in Decision Making Under Risk and Uncertainty written by Mohammed Abdellaoui and published by Springer Science & Business Media. This book was released on 2008-08-29 with total page 245 pages. Available in PDF, EPUB and Kindle. Book excerpt: Whether we like it or not we all feel that the world is uncertain. From choosing a new technology to selecting a job, we rarely know in advance what outcome will result from our decisions. Unfortunately, the standard theory of choice under uncertainty developed in the early forties and fifties turns out to be too rigid to take many tricky issues of choice under uncertainty into account. The good news is that we have now moved away from the early descriptively inadequate modeling of behavior. This book brings the reader into contact with the accomplished progress in individual decision making through the most recent contributions to uncertainty modeling and behavioral decision making. It also introduces the reader into the many subtle issues to be resolved for rational choice under uncertainty.
Author : Yakov Ben-Haim
Publisher : Elsevier
ISBN 13 : 0080465706
Total Pages : 385 pages
Book Rating : 4.0/5 (84 download)
Download or read book Info-Gap Decision Theory written by Yakov Ben-Haim and published by Elsevier. This book was released on 2006-10-11 with total page 385 pages. Available in PDF, EPUB and Kindle. Book excerpt: Everyone makes decisions, but not everyone is a decision analyst. A decision analyst uses quantitative models and computational methods to formulate decision algorithms, assess decision performance, identify and evaluate options, determine trade-offs and risks, evaluate strategies for investigation, and so on. Info-Gap Decision Theory is written for decision analysts. The term "decision analyst" covers an extremely broad range of practitioners. Virtually all engineers involved in design (of buildings, machines, processes, etc.) or analysis (of safety, reliability, feasibility, etc.) are decision analysts, usually without calling themselves by this name. In addition to engineers, decision analysts work in planning offices for public agencies, in project management consultancies, they are engaged in manufacturing process planning and control, in financial planning and economic analysis, in decision support for medical or technological diagnosis, and so on and on. Decision analysts provide quantitative support for the decision-making process in all areas where systematic decisions are made. This second edition entails changes of several sorts. First, info-gap theory has found application in several new areas - especially biological conservation, economic policy formulation, preparedness against terrorism, and medical decision-making. Pertinent new examples have been included. Second, the combination of info-gap analysis with probabilistic decision algorithms has found wide application. Consequently "hybrid" models of uncertainty, which were treated exclusively in a separate chapter in the previous edition, now appear throughout the book as well as in a separate chapter. Finally, info-gap explanations of robust-satisficing behavior, and especially the Ellsberg and Allais "paradoxes", are discussed in a new chapter together with a theorem indicating when robust-satisficing will have greater probability of success than direct optimizing with uncertain models. New theory developed systematically Many examples from diverse disciplines Realistic representation of severe uncertainty Multi-faceted approach to risk Quantitative model-based decision theory
Author : National Research Council
Publisher : National Academies Press
ISBN 13 : 0309180538
Total Pages : 124 pages
Book Rating : 4.3/5 (91 download)
Download or read book Completing the Forecast written by National Research Council and published by National Academies Press. This book was released on 2006-10-09 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: Uncertainty is a fundamental characteristic of weather, seasonal climate, and hydrological prediction, and no forecast is complete without a description of its uncertainty. Effective communication of uncertainty helps people better understand the likelihood of a particular event and improves their ability to make decisions based on the forecast. Nonetheless, for decades, users of these forecasts have been conditioned to receive incomplete information about uncertainty. They have become used to single-valued (deterministic) forecasts (e.g., "the high temperature will be 70 degrees Farenheit 9 days from now") and applied their own experience in determining how much confidence to place in the forecast. Most forecast products from the public and private sectors, including those from the National Oceanographic and Atmospheric Administration's National Weather Service, continue this deterministic legacy. Fortunately, the National Weather Service and others in the prediction community have recognized the need to view uncertainty as a fundamental part of forecasts. By partnering with other segments of the community to understand user needs, generate relevant and rich informational products, and utilize effective communication vehicles, the National Weather Service can take a leading role in the transition to widespread, effective incorporation of uncertainty information into predictions. "Completing the Forecast" makes recommendations to the National Weather Service and the broader prediction community on how to make this transition.
Author : Russell Golman
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (13 download)
Download or read book Information Gaps for Risk and Ambiguity written by Russell Golman and published by . This book was released on 2015 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: We apply a model of preferences for information to the domain of decision making under risk and ambiguity. An uncertain prospect exposes an individual to an information gap. Gambling makes the missing information more important, attracting more attention to the information gap. To the extent that the uncertainty (or other circumstances) makes the information gap unpleasant to think about, an individual tends to be averse to risk and ambiguity. Yet in circumstances in which thinking about an information gap is pleasant, an individual may exhibit risk- and ambiguity-seeking. The model provides explanations for source preference regarding uncertainty, the comparative ignorance effect under conditions of ambiguity, aversion to compound risk, and a variety of other phenomena. We present an empirical test of one of the model's novel predictions.
Author : Elisabeth S.C. Berger
Publisher : Springer
ISBN 13 : 3319271083
Total Pages : 490 pages
Book Rating : 4.3/5 (192 download)
Download or read book Complexity in Entrepreneurship, Innovation and Technology Research written by Elisabeth S.C. Berger and published by Springer. This book was released on 2016-02-25 with total page 490 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume discusses the challenge of dealing with complexity in entrepreneurship, innovation and technology research. Businesses as well as entire economies are increasingly being confronted by widespread complex systems. Fields such as entrepreneurship and innovation cannot ignore this reality, especially with their inherent links to diverse research fields and interdisciplinary methods. However, most methods that allow more detailed analyses of complex problems are either neglected in mainstream research or are, at best, still emerging. Against this backdrop, this book provides a forum for the discussion of emergent and neglected methods in the context of complexity in entrepreneurship, innovation and technology research, and also acts as an inspiration for academics across related disciplines to engage more in complexity research.
Author : Sasha Prokosheva
Publisher :
ISBN 13 : 9788073433307
Total Pages : 38 pages
Book Rating : 4.4/5 (333 download)
Download or read book Comparing Decisions Under Compound Risk and Ambiguity: the Importance of Cognitive Skills written by Sasha Prokosheva and published by . This book was released on 2014 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Gideon Keren
Publisher : John Wiley & Sons
ISBN 13 : 1118468392
Total Pages : 1056 pages
Book Rating : 4.1/5 (184 download)
Download or read book The Wiley Blackwell Handbook of Judgment and Decision Making, 2 Volume Set written by Gideon Keren and published by John Wiley & Sons. This book was released on 2016-02-16 with total page 1056 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive, up-to-date examination of the most important theory, concepts, methodological approaches, and applications in the burgeoning field of judgment and decision making (JDM) Emphasizes the growth of JDM applications with chapters devoted to medical decision making, decision making and the law, consumer behavior, and more Addresses controversial topics from multiple perspectives – such as choice from description versus choice from experience – and contrasts between empirical methodologies employed in behavioral economics and psychology Brings together a multi-disciplinary group of contributors from across the social sciences, including psychology, economics, marketing, finance, public policy, sociology, and philosophy 2 Volumes
Author : Louis Eeckhoudt
Publisher : Princeton University Press
ISBN 13 : 1400829216
Total Pages : 245 pages
Book Rating : 4.4/5 (8 download)
Download or read book Economic and Financial Decisions under Risk written by Louis Eeckhoudt and published by Princeton University Press. This book was released on 2011-10-30 with total page 245 pages. Available in PDF, EPUB and Kindle. Book excerpt: An understanding of risk and how to deal with it is an essential part of modern economics. Whether liability litigation for pharmaceutical firms or an individual's having insufficient wealth to retire, risk is something that can be recognized, quantified, analyzed, treated--and incorporated into our decision-making processes. This book represents a concise summary of basic multiperiod decision-making under risk. Its detailed coverage of a broad range of topics is ideally suited for use in advanced undergraduate and introductory graduate courses either as a self-contained text, or the introductory chapters combined with a selection of later chapters can represent core reading in courses on macroeconomics, insurance, portfolio choice, or asset pricing. The authors start with the fundamentals of risk measurement and risk aversion. They then apply these concepts to insurance decisions and portfolio choice in a one-period model. After examining these decisions in their one-period setting, they devote most of the book to a multiperiod context, which adds the long-term perspective most risk management analyses require. Each chapter concludes with a discussion of the relevant literature and a set of problems. The book presents a thoroughly accessible introduction to risk, bridging the gap between the traditionally separate economics and finance literatures.
Author : Yaroslav Rosokha
Publisher :
ISBN 13 :
Total Pages : 258 pages
Book Rating : 4.:/5 (862 download)
Download or read book Three Experiments on Decision-making Under Uncertainty in Dynamic Environments written by Yaroslav Rosokha and published by . This book was released on 2013 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three economic experiments that investigate behavioral differences in decision making process under risk (uncertainty with known probabilities) and under ambiguity (uncertainty with unknown probabilities). The first and the second chapters present two experiments with subjects choosing between lotteries involving risky and ambiguous urns. Decisions are made in conjunction with a sequence of random draws with replacement, allowing us to track the beliefs of the agents at different moments in time. In the first chapter, we develop and estimate a model of subjective belief updating allowing for base rate fallacy. We find that when updating under ambiguity subjects significantly underweight the new signal, while when updating under compound risk subjects are essentially Bayesian. In the second chapter, we estimate a popular multiple priors model for decision making under ambiguity in dynamic environments. Our estimates suggest a difference in the confidence with which subjects discard the unlikely priors depending on whether an ambiguous urn was presented first or second. Specifically, when an ambiguous urn is presented first, subjects consider more priors during the learning process as compared to when a compound urn is presented first. We also find significant evidence against the hypothesis that human subjects consider only Dirac priors. In the third chapter, we examine the behavior of security dealers in an environment where the level of asymmetric information is viewed as either risk, compound risk, or ambiguity. Using two measures of market liquidity, resiliency and price, we find that duopoly dealer markets are both more resilient to uncertainty about asymmetric information as well as having higher dealer bids compared with monopoly dealer markets for all three uncertainty scenarios. Additionally, we find differences in dealer bidding behavior in duopoly setting depending on whether the uncertainty about informed trading is presented as risk, compound risk, or ambiguity.
Author : Benjamin Albrecht
Publisher :
ISBN 13 : 9783830085713
Total Pages : 154 pages
Book Rating : 4.0/5 (857 download)
Download or read book Decision-Making Under Risk and Ambiguity written by Benjamin Albrecht and published by . This book was released on 2015 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Mykel J. Kochenderfer
Publisher : MIT Press
ISBN 13 : 0262331713
Total Pages : 350 pages
Book Rating : 4.2/5 (623 download)
Download or read book Decision Making Under Uncertainty written by Mykel J. Kochenderfer and published by MIT Press. This book was released on 2015-07-24 with total page 350 pages. Available in PDF, EPUB and Kindle. Book excerpt: An introduction to decision making under uncertainty from a computational perspective, covering both theory and applications ranging from speech recognition to airborne collision avoidance. Many important problems involve decision making under uncertainty—that is, choosing actions based on often imperfect observations, with unknown outcomes. Designers of automated decision support systems must take into account the various sources of uncertainty while balancing the multiple objectives of the system. This book provides an introduction to the challenges of decision making under uncertainty from a computational perspective. It presents both the theory behind decision making models and algorithms and a collection of example applications that range from speech recognition to aircraft collision avoidance. Focusing on two methods for designing decision agents, planning and reinforcement learning, the book covers probabilistic models, introducing Bayesian networks as a graphical model that captures probabilistic relationships between variables; utility theory as a framework for understanding optimal decision making under uncertainty; Markov decision processes as a method for modeling sequential problems; model uncertainty; state uncertainty; and cooperative decision making involving multiple interacting agents. A series of applications shows how the theoretical concepts can be applied to systems for attribute-based person search, speech applications, collision avoidance, and unmanned aircraft persistent surveillance. Decision Making Under Uncertainty unifies research from different communities using consistent notation, and is accessible to students and researchers across engineering disciplines who have some prior exposure to probability theory and calculus. It can be used as a text for advanced undergraduate and graduate students in fields including computer science, aerospace and electrical engineering, and management science. It will also be a valuable professional reference for researchers in a variety of disciplines.
Author : Jian Li
Publisher :
ISBN 13 :
Total Pages : 79 pages
Book Rating : 4.:/5 (94 download)
Download or read book Models of Information Acquisition Under Ambiguity written by Jian Li and published by . This book was released on 2012 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies models of dynamic choices under uncertainty with endogenous information acquisition. In particular we are interested in exploring the interactions between ambiguity attitudes and the incentive to collect new information. The first chapter explores the link between intrinsic preferences for information and ambiguity attitudes in settings with subjective uncertainty. We enrich the standard dynamic choice model in two dimensions. First, we introduce a novel choice domain that allows preferences to be indexed by the intermediate information, modeled as partitions of the underlying state space. Second, conditional on a given information partition, we allow preferences over state-contingent outcomes to depart from expected utility axioms. In particular we accommodate ambiguity sensitive preferences. We show that aversion to partial information is equivalent to a property of static preferences called Event Complementarity. We show that Event Complementarity and aversion to partial information are closely related to ambiguity attitudes. In familiar classes of ambiguity preferences, we identify conditions that characterize aversion to partial information. The second chapter extends the basic model to allow for choices from non-singleton menus after partial information is revealed, and studies the value of information under ambiguity. We show that the value of information is not monotonic under ambiguity. Intrinsic aversion to partial information in the basic model is equivalent to a preference for perfect information in the extended model. Moreover, the value of information is not monotone in the degree of ambiguity aversion. The third chapter studies the impact of ambiguity in a classic information acquisition model-the K-armed bandit problem. We consider a particular family of ambiguity averse preferences, the multiple-priors model [Marinacci, 2002]. A previous paper [Li, 2012] shows that major classic characterizations of optimal strategies in the K-armed bandit problems extend to incorporate ambiguity in the multiple-priors model. Here we explore new implications of ambiguity on the optimal incentive to experiment. First, increasing ambiguity in the unknown arm reduces the incentive to experiment, while increasing risk in the unknown arm typically increases the incentive to experiment. This suggests that ambiguity can offer an explanation for the widely observed under-experimentation in novel technology and consumer products. Second, optimal experimentation in the multiple-priors bandit problem generally cannot be reduced to that in a classic bandit problem with an equivalent single prior. In particular, the lower envelope of the classic single-prior Gittins-Jones index for every prior lying in the multiple-priors set can be strictly higher than the generalized multiple-prior Gittins-Jones index. In one-dimensional parametric family, we identify monotonicity conditions under which this discrepancy disappears so an equivalent single prior exists.
