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Representation Effects and Loss Aversion in Analytical Behaviour: An Experimental Study into Decision Making Facilitated by Visual Analytics
This paper presents the results of an experiment into the relationship between the representation of data and decision-making. Three hundred participants online, were asked to choose between a series of financial investment opportunities using data presented in line charts. A single dependent variable of investment choice was examined over four levels of varying display conditions and randomised data. Three variations to line chart visualisations provided a controlled factor between subjects divided into three groups; -˜standard’ line charts, -˜tall’ line charts, and one dual-series line chart. The final results revealed a consistent main effect and two other interactions between certain display conditions and decision-making. The findings of this paper are significant to the study visualisation and to the field of visual analytics. This experiment was devised as part of a study into Analytical Behaviour, defined as decision-making facilitated by visual analytics - a new topic that encompasses existing research and real-world applications
Needs and challenges for assessing the environmental impacts of engineered nanomaterials (ENMs).
The potential environmental impact of nanomaterials is a critical concern and the ability to assess these potential impacts is top priority for the progress of sustainable nanotechnology. Risk assessment tools are needed to enable decision makers to rapidly assess the potential risks that may be imposed by engineered nanomaterials (ENMs), particularly when confronted by the reality of limited hazard or exposure data. In this review, we examine a range of available risk assessment frameworks considering the contexts in which different stakeholders may need to assess the potential environmental impacts of ENMs. Assessment frameworks and tools that are suitable for the different decision analysis scenarios are then identified. In addition, we identify the gaps that currently exist between the needs of decision makers, for a range of decision scenarios, and the abilities of present frameworks and tools to meet those needs
Data-driven satisficing measure and ranking
We propose an computational framework for real-time risk assessment and
prioritizing for random outcomes without prior information on probability
distributions. The basic model is built based on satisficing measure (SM) which
yields a single index for risk comparison. Since SM is a dual representation
for a family of risk measures, we consider problems constrained by general
convex risk measures and specifically by Conditional value-at-risk. Starting
from offline optimization, we apply sample average approximation technique and
argue the convergence rate and validation of optimal solutions. In online
stochastic optimization case, we develop primal-dual stochastic approximation
algorithms respectively for general risk constrained problems, and derive their
regret bounds. For both offline and online cases, we illustrate the
relationship between risk ranking accuracy with sample size (or iterations).Comment: 26 Pages, 6 Figure
Load Shifting in the Smart Grid: To Participate or Not?
Demand-side management (DSM) has emerged as an important smart grid feature
that allows utility companies to maintain desirable grid loads. However, the
success of DSM is contingent on active customer participation. Indeed, most
existing DSM studies are based on game-theoretic models that assume customers
will act rationally and will voluntarily participate in DSM. In contrast, in
this paper, the impact of customers' subjective behavior on each other's DSM
decisions is explicitly accounted for. In particular, a noncooperative game is
formulated between grid customers in which each customer can decide on whether
to participate in DSM or not. In this game, customers seek to minimize a cost
function that reflects their total payment for electricity. Unlike classical
game-theoretic DSM studies which assume that customers are rational in their
decision-making, a novel approach is proposed, based on the framework of
prospect theory (PT), to explicitly incorporate the impact of customer behavior
on DSM decisions. To solve the proposed game under both conventional game
theory and PT, a new algorithm based on fictitious player is proposed using
which the game will reach an epsilon-mixed Nash equilibrium. Simulation results
assess the impact of customer behavior on demand-side management. In
particular, the overall participation level and grid load can depend
significantly on the rationality level of the players and their risk aversion
tendency.Comment: 9 pages, 7 figures, journal, accepte
Discounting the Long-Distant Future: A Simple Explanation for the Weitzman-Gollier-Puzzle
In this paper, we reconsider the debate on Weitzman's (1998) suggestion to discount the long-run future at the lowest possible rate, referring to Gollier (2004) and Hepburn & Groom (2007). We show that, while Weitzman's use of the present value approach may indeed seem questionable, its outcome, i.e. a discount rate that is declining over time, is nevertheless reasonable, since it can be justified by assuming a plausible degree of risk aversion.discount rates, uncertainty, risk aversion
An overview of economic applications of David Schmeidler`s models of decision making under uncertainty
This paper surveys some economic applications of the decision theoretic framework pioneered by David Schmeidler to model effects of ambiguity. We have organized the discussion principally around three themes: financial markets, contractual arrangements and game theory. The first section discusses papers that have contributed to a better understanding of financial market outcomes based on ambiguity aversion. The second section focusses on contractual arrangements and is divided into two sub-sections. The first sub-section reports research on optimal risk sharing arrangements, while in the second sub-section, discusses research on incentive contracts. The third section concentrates on strategic interaction and reviews several papers that have extended different game theoretic solution concepts to settings with ambiguity averse players. A final section deals with several contributions which while not dealing with ambiguity per se, are linked at a formal level, in terms of the pure mathematical structures involved, with Schmeidler`s models of decision making under ambiguity. These contributions involve issues such as, inequality measurement, intertemporal decision making and multi-attribute choice.Ellsberg Paradox, Ambiguity aversion, Uncertainty aversion
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