TI-games I: An exploration of Type Indeterminacy in strategic decision-making

The Type Indeterminacy model is a theoretical framework that formalizes the constructive preference perspective suggested by Kahneman and Tversky. In this paper we explore an extention of the TI-model from simple to strategic decision-making. A 2X2 game is investigated. We first show that in a one-shot simultaneaous move setting the TI-model is equivalent to a standard incomplete information model. We then let the game be preceded by a cheap-talk promise exchange game. We show in an example that in the TI-model the promise stage can have impact on next following behavior when the standard classical model predicts no impact whatsoever. The TI approach differs from other behavioral approaches in identifying the source of the effect of cheap-talk promises in the intrinsic indeterminacy of the players' type.quantum indeterminacy ; type ; strategic decision-making ; game

TI-games I: An Exploration of Type Indeterminacy In Strategic Decision-Making

The Type Indeterminacy model is a theoretical framework that formalizes the constructive preference perspective suggested by Kahneman and Tversky. In this paper we explore an extention of the TI-model from simple to strategic decision-making. A 2X2 game is investigated. We first show that in a one-shot simultaneaous move setting the TI-model is equivalent to a standard incomplete information model. We then let the game be preceded by a cheap-talk promise exchange game. We show in an example that in the TI-model the promise stage can have impact on next following behavior when the standard classical model predicts no impact whatsoever. The TI approach differs from other behavioral approaches in identifying the source of the effect of cheap-talk promises in the intrinsic indeterminacy of the players' type.Comment: 18

Endogenous preferences in games with type indeterminate players

The Type Indeterminacy model is a theoretical framework that uses some elements of quantum formalism to model the constructive preference perspective suggested by Kahneman and Tversky. In this paper we extend the TI-model from simple to strategic decision-making and show that TI-games open a new field of strategic interaction. We first establish an equivalence result between static games of incomplete information and static TI-games. We next develop a new solution concept for non-commuting dynamic TI-games. The updating rule captures the novelty brought about by Type Indeterminacy namely that in addition to affecting information and payoffs, the action of a player impacts on the profile of types. We provide an example showing that TI-game predictions cannot be obtained as Bayes Nash equilibrium of the corresponding classical game.type indeterminacy ; games ; endogeneous preferences

Exploring entrepreneurial learning: A comparative study of technology development projects

In this paper, we report findings from a comparative study of factors that influence the learning process that underlies entrepreneurial innovation, as entrepreneurs move from an initial intuition to a well-developed new product or service. Evidence from our comparative study highlights the self-reinforcing effect of prior related knowledge, perceived incentives and the degree of control on the allocation of entrepreneurs' limited time, attention and resources. Combining theory and evidence from our study, we propose an interpretative model that suggests that innovation in entrepreneurial ventures rests on self-reinforcing learning cycles that lead entrepreneurs to dedicate increasing resources to the exploration of some opportunities at the expense of others, following a sensemaking process affected by their previous knowledge and their degree of involvement in the projects

Growth Cycles

We construct a rational expectations model in which aggregate growth alternates between a low growth and a high growth state. When all agents expect growth to be slow, the returns on investment are low, and little investment takes place. This slows growth and confirms the prediction that the returns on investment will be low. But if agents expect fast growth, investment is high, returns are high, and growth is rapid. This expectational indeterminacy is induced by complementarity between different types of capital goods. In a growth cycle there are stochastic shifts between high and low growth states and agents take full account of these transitions. The rules that agents need to form rational expectations in this equilibrium are simple. The equilibrium with growth cycles is stable under the dynamics implied by a correspondingly simple learning rule

Lending relationships and monetary policy

Financial intermediation and bank spreads are important elements in the analysis of business cycle transmission and monetary policy. We present a simple framework that introduces lending relationships, a relevant feature of financial intermediation that has been so far neglected in the monetary economics literature, into a dynamic stochastic general equilibrium model with staggered prices and cost channels. Our main findings are: (i) banking spreads move countercyclically generating amplified output responses, (ii) spread movements are important for monetary policy making even when a standard Taylor rule is employed (iii) modifying the policy rule to include a banking spread adjustment improves stabilization of shocks and increases welfare when compared to rules that only respond to output gap and inflation, and finally (iv) the presence of strong lending relationships in the banking sector can lead to indeterminacy of equilibrium forcing the central bank to react to spread movements

Applying user journey design to resolve complex design problems

The proliferation of complex problems in a world of increasing indeterminacy, not least within developing contexts, places new demands on stakeholders, educators, students, practitioners and theorists. A user, or customer, journey is a schematic representation of the path a user will take through lifecycle stages, touchpoints, channels, interaction modes, emotional states, content and functionality. User journeys have become a frequently applied tool for research and design in the practical fields of Design Thinking, Service Design, User Experience Design and Information Architecture Design. In our paper we position User Journey Design as both a tool and a rigorous selfreflective, data-driven process through information gathering, synthesis and into design, which assists the student designer in navigating the complexities of indeterminate problems. Initially the paper present a history and review of the literature, application and limitations of User Journey Design in practice today which explores related literature from Design Thinking and the nature of indeterminacy in design (Buchanan, 1992, Brown 2008, Cross 2006,) to set the context for an approach that broadens the relevance and application of User Journey Design. This paper then present two examples of student design work that demonstrate the application of user journey design in the resolution of complex problems. User Journeys provide a structured approach to synthesizing large amounts of data in self-reflective, humanistic ways, where the path through complexity can be traced back from artifact to the original problem-formation. It is in this respect that User Journey Design not only provides an approach to solving problems that emerge through complexity, but also narrows the gap between practice, research and teaching