Herding and Social Pressure in Trading Tasks: A Behavioural Analysis

We extend the experimental literature on Bayesian herding using evidence from a financial decision-making experiment. We identify significant propensities to herd increasing with the degree of herd-consensus. We test various herding models to capture the differential impacts of Bayesian-style thinking versus behavioural factors. We find statistically significant associations between herding and individual characteristics such as age and personality traits. Overall, our evidence is consistent with explanations of herding as the outcome of social and behavioural factors. Suggestions for further research are outlined and include verifying these findings and identifying the neurological correlates of propensities to herd

A Manifesto for the Equifinality Thesis.

This essay discusses some of the issues involved in the identification and predictions of hydrological models given some calibration data. The reasons for the incompleteness of traditional calibration methods are discussed. The argument is made that the potential for multiple acceptable models as representations of hydrological and other environmental systems (the equifinality thesis) should be given more serious consideration than hitherto. It proposes some techniques for an extended GLUE methodology to make it more rigorous and outlines some of the research issues still to be resolved

Judgments of effort exerted by others are influenced by received rewards

Estimating invested effort is a core dimension for evaluating own and others’ actions, and views on the relationship between effort and rewards are deeply ingrained in various societal attitudes. Internal representations of effort, however, are inherently noisy, e.g. due to the variability of sensorimotor and visceral responses to physical exertion. The uncertainty in effort judgments is further aggravated when there is no direct access to the internal representations of exertion – such as when estimating the effort of another person. Bayesian cue integration suggests that this uncertainty can be resolved by incorporating additional cues that are predictive of effort, e.g. received rewards. We hypothesized that judgments about the effort spent on a task will be influenced by the magnitude of received rewards. Additionally, we surmised that such influence might further depend on individual beliefs regarding the relationship between hard work and prosperity, as exemplified by a conservative work ethic. To test these predictions, participants performed an effortful task interleaved with a partner and were informed about the obtained reward before rating either their own or the partner’s effort. We show that higher rewards led to higher estimations of exerted effort in self-judgments, and this effect was even more pronounced for other-judgments. In both types of judgment, computational modelling revealed that reward information and sensorimotor markers of exertion were combined in a Bayes-optimal manner in order to reduce uncertainty. Remarkably, the extent to which rewards influenced effort judgments was associated with conservative world-views, indicating links between this phenomenon and general beliefs about the relationship between effort and earnings in society

Using causal models to distinguish between neurogenesis-dependent and -independent effects on behaviour

There has been a substantial amount of research on the relationship between hippocampal neurogenesis and behaviour over the past fifteen years, but the causal role that new neurons have on cognitive and affective behavioural tasks is still far from clear. This is partly due to the difficulty of manipulating levels of neurogenesis without inducing off-target effects, which might also influence behaviour. In addition, the analytical methods typically used do not directly test whether neurogenesis mediates the effect of an intervention on behaviour. Previous studies may have incorrectly attributed changes in behavioural performance to neurogenesis because the role of known (or unknown) neurogenesis-independent mechanisms were not formally taken into consideration during the analysis. Causal models can tease apart complex causal relationships and were used to demonstrate that the effect of exercise on pattern separation is via neurogenesis-independent mechanisms. Many studies in the neurogenesis literature would benefit from the use of statistical methods that can separate neurogenesis-dependent from neurogenesis-independent effects on behaviour

A tree formulation for signaling games

We provide a detailed presentation and complete analysis of the sender/receiver Lewis signaling game using a game theory extensive form, decision tree formulation. The analysis employs well established game theory ideas and concepts. We establish the existence of four perfect Bayesian equilibria in this game. We explain which equilibrium is the most likely to prevail. Our explanation provides an essential step for understanding the formation of a language convention. Further, we discuss the informational content of such signals and calibrate a more detailed definition of a true (“correct”) signal in terms of the payoffs of the sender and the receiver

Neural signals encoding shifts in beliefs

Dopamine is implicated in a diverse range of cognitive functions including cognitive flexibility, task switching, signalling novel or unexpected stimuli as well as advance information. There is also longstanding line of thought that links dopamine with belief formation and, crucially, aberrant belief formation in psychosis. Integrating these strands of evidence would suggest that dopamine plays a central role in belief updating and more specifically in encoding of meaningful information content in observations. The precise nature of this relationship has remained unclear. To directly address this question we developed a paradigm that allowed us to decompose two distinct types of information content, information-theoretic surprise that reflects the unexpectedness of an observation, and epistemic value that induces shifts in beliefs or, more formally, Bayesian surprise. Using functional magnetic-resonance imaging in humans we show that dopamine-rich midbrain regions encode shifts in beliefs whereas surprise is encoded in prefrontal regions, including the pre-supplementary motor area and dorsal cingulate cortex. By linking putative dopaminergic activity to belief updating these data provide a link to false belief formation that characterises hyperdopaminergic states associated with idiopathic and drug induced psychosis