Uncertainty, risk, and financial disclosures : applications of natural language processing in behavioral economics

In the last decade, natural language processing (NLP) methods have received increasing attention for applications in behavioral economics. Such methods enable the automatic content analysis of large corpora of financial disclosures, e.g., annual reports or earnings calls. In this setting, a conceptually interesting but underexplored variable is linguistic uncertainty: Due to the unpredictability of the financial market, it is often necessary for corporate management to use hedge expressions such as “likely” or “possible” in their financial communication. On the other hand, management can also use uncertain language to influence investors strategically, for example, through deliberate obfuscation. In this dissertation, we present NLP methods for the automated detection of linguistic uncertainty. Furthermore, we introduce the first experimental study to establish a causal link between linguistic uncertainty and investor behavior. Finally, we propose regression models to explain and predict financial risk. In addition to the independent variable of linguistic uncertainty, we explore a psychometric and an assumption-free model based on Deep Learning

Computational and Robotic Models of Early Language Development: A Review

We review computational and robotics models of early language learning and development. We first explain why and how these models are used to understand better how children learn language. We argue that they provide concrete theories of language learning as a complex dynamic system, complementing traditional methods in psychology and linguistics. We review different modeling formalisms, grounded in techniques from machine learning and artificial intelligence such as Bayesian and neural network approaches. We then discuss their role in understanding several key mechanisms of language development: cross-situational statistical learning, embodiment, situated social interaction, intrinsically motivated learning, and cultural evolution. We conclude by discussing future challenges for research, including modeling of large-scale empirical data about language acquisition in real-world environments. Keywords: Early language learning, Computational and robotic models, machine learning, development, embodiment, social interaction, intrinsic motivation, self-organization, dynamical systems, complexity.Comment: to appear in International Handbook on Language Development, ed. J. Horst and J. von Koss Torkildsen, Routledg

Reasoning of non- and pre-linguistic creatures: How much do the experiments tell us?

If a conclusion was reached that creatures without a language capability exhibit some form of a capability for logic, this would shed a new light on the relationship between logic, language, and thought. Recent experimental attempts to test whether some animals, as well as pre-linguistic human infants, are capable of exclusionary reasoning are taken to support exactly that conclusion. The paper discusses the analyses and conclusions of two such studies: Call’s (2004) two cups task, and Mody and Carey’s (2016) four cups task. My paper exposes hidden assumptions within these analyses, which enable the authors to settle on the explanation which assigns logical capabilities to the participants of the studies, as opposed to the explanations which do not. The paper then demonstrates that the competing explanations of the experimental results are theoretically underdeveloped, rendering them unclear in their predictions concerning the behavior of cognitive subjects, and thus difficult to distinguish by use of experiments. Additionally, it is questioned whether the explanations are rivals at all, i.e. whether they compete to explain the cognitive processes of the same level. The contribution of the paper is conceptual. Its aim is to clear up the concepts involved in these analyses, in order to avoid oversimplified or premature conclusions about the cognitive abilities of pre- and non-linguistic creatures. It is also meant to show that the theoretical space surrounding the issues involved might be much more diverse and unknown than many of these studies imply

The Missing Link between Morphemic Assemblies and Behavioral Responses:a Bayesian Information-Theoretical model of lexical processing

We present the Bayesian Information-Theoretical (BIT) model of lexical processing: A mathematical model illustrating a novel approach to the modelling of language processes. The model shows how a neurophysiological theory of lexical processing relying on Hebbian association and neural assemblies can directly account for a variety of effects previously observed in behavioural experiments. We develop two information-theoretical measures of the distribution of usages of a morpheme or word, and use them to predict responses in three visual lexical decision datasets investigating inflectional morphology and polysemy. Our model offers a neurophysiological basis for the effects of morpho-semantic neighbourhoods. These results demonstrate how distributed patterns of activation naturally result in the arisal of symbolic structures. We conclude by arguing that the modelling framework exemplified here, is a powerful tool for integrating behavioural and neurophysiological results

Statistical Inferences for Polarity Identification in Natural Language

Information forms the basis for all human behavior, including the ubiquitous decision-making that people constantly perform in their every day lives. It is thus the mission of researchers to understand how humans process information to reach decisions. In order to facilitate this task, this work proposes a novel method of studying the reception of granular expressions in natural language. The approach utilizes LASSO regularization as a statistical tool to extract decisive words from textual content and draw statistical inferences based on the correspondence between the occurrences of words and an exogenous response variable. Accordingly, the method immediately suggests significant implications for social sciences and Information Systems research: everyone can now identify text segments and word choices that are statistically relevant to authors or readers and, based on this knowledge, test hypotheses from behavioral research. We demonstrate the contribution of our method by examining how authors communicate subjective information through narrative materials. This allows us to answer the question of which words to choose when communicating negative information. On the other hand, we show that investors trade not only upon facts in financial disclosures but are distracted by filler words and non-informative language. Practitioners - for example those in the fields of investor communications or marketing - can exploit our insights to enhance their writings based on the true perception of word choice

An integrated theory of language production and comprehension

Currently, production and comprehension are regarded as quite distinct in accounts of language processing. In rejecting this dichotomy, we instead assert that producing and understanding are interwoven, and that this interweaving is what enables people to predict themselves and each other. We start by noting that production and comprehension are forms of action and action perception. We then consider the evidence for interweaving in action, action perception, and joint action, and explain such evidence in terms of prediction. Specifically, we assume that actors construct forward models of their actions before they execute those actions, and that perceivers of others' actions covertly imitate those actions, then construct forward models of those actions. We use these accounts of action, action perception, and joint action to develop accounts of production, comprehension, and interactive language. Importantly, they incorporate well-defined levels of linguistic representation (such as semantics, syntax, and phonology). We show (a) how speakers and comprehenders use covert imitation and forward modeling to make predictions at these levels of representation, (b) how they interweave production and comprehension processes, and (c) how they use these predictions to monitor the upcoming utterances. We show how these accounts explain a range of behavioral and neuroscientific data on language processing and discuss some of the implications of our proposal

Towards a complete multiple-mechanism account of predictive language processing [Commentary on Pickering & Garrod]

Although we agree with Pickering & Garrod (P&G) that prediction-by-simulation and prediction-by-association are important mechanisms of anticipatory language processing, this commentary suggests that they: (1) overlook other potential mechanisms that might underlie prediction in language processing, (2) overestimate the importance of prediction-by-association in early childhood, and (3) underestimate the complexity and significance of several factors that might mediate prediction during language processing