Multiple Priors as Similarity Weighted Frequencies

In this paper, we consider a decision-maker who tries to learn the distribution of outcomes from previously observed cases. For each observed sequence of cases the decision-maker predicts a set of priors expressing his beliefs about the underlying probability distribution. We impose a version of the concatenation axiom introduced in BILLOT, GILBOA, SAMET AND SCHMEIDLER (2005) which insures that the sets of priors can be represented as a weighted sum of the observed frequencies of cases. The weights are the uniquely determined similarities between the observed cases and the case under investigation.

Multiple Priors as Similarity Weighted Frequencies

In this paper, we consider a decision-maker who tries to learn the distribution of outcomes from previously observed cases. For each observed sequence of cases the decision-maker predicts a set of priors expressing his beliefs about the underlying probability distribution. We impose a version of the concatenation axiom introduced in BILLOT, GILBOA, SAMET AND SCHMEIDLER (2005) which insures that the sets of priors can be represented as a weighted sum of the observed frequencies of cases. The weights are the uniquely determined similarities between the observed cases and the case under investigation.

Preferences induced by accessibility: Evidence from priming

In one experiment, we studied risky preferences using a semantic-priming paradigm where accessibility is manipulated independently of beliefs about the frequencies of risky events. We compared the risks taken for precautionary decisions primed by relevant information (enhancing accessibility to relevant events) with those taken for unprimed decisions and decisions primed by irrelevant information. We found that both priming and the subjective frequency of beliefs independently influence decision making. The results indicate that decisions are the result of an integration of influences derived from both the description (specified probability) and experience (accessibility to pre-experiment beliefs about event frequencies and temporarily activated relevant events) of risks. People's risk preferences are influenced by the accessibility of events in memory, such that increasing accessibility causes risk aversion to a potential loss to increase. Our research findings are not anticipated by the descriptive invariance axiom of expected utility theory, which states that equivalent formulations of a choice problem give rise to the same preference order

Comparison of four methods for assessing the importance of attitudinal beliefs: An international Delphi study in intensive care settings

Objectives: Behaviour change interventions often target ‘important’ beliefs. The literature proposes four methods for assessing importance of attitudinal beliefs: elicitation frequency, importance ratings, and strength of prediction (bivariate and multivariate). We tested congruence between these methods in a Delphi study about selective decontamination of the digestive tract (SDD). SDD improves infection rates among critically ill patients, yet uptake in intensive care units is low internationally. Methods: A Delphi study involved three iterations (‘rounds’). Participants were 105 intensive care clinicians in the United Kingdom, Canada, and Australia/New Zealand. In Round 1, semi‐structured interviews were conducted to elicit beliefs about delivering SDD. In Rounds 2 and 3, participants completed questionnaires, rating agreement and importance for each belief‐statement (9‐point Likert scales). Belief importance was assessed using elicitation frequency, mean importance ratings, and prediction of global attitude (Pearson's correlations; beta‐weights). Correlations between indices were computed. Results: Participants generated 14 attitudinal beliefs. Indices had adequate variation (frequencies: 4–94, mean importance ratings: 4.93–8.00, Pearson's correlations: ±0.09 to ±0.54, beta‐weights: ±0.01 to ±0.30). SDD increases antibiotic resistance was the most important belief according to three methods and was ranked second by beta‐weights (behind Overall, SDD benefits patients to whom it is delivered). Spearman's correlations were significant for importance ratings with frequencies and correlations. However, other indices were unrelated. The top four beliefs differed according to the measure used. Conclusions: Results provided evidence of congruence across three methods for assessing belief importance. Beta‐weights were unrelated to other indices, suggesting that they may not be appropriate as the sole method

Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations

We develop a model in which innovations in an economy's growth potential are an important driving force of the business cycle. The framework shares the emphasis of the recent "new shock" literature on revisions of beliefs about the future as a source of fluctuations, but differs by tieing these beliefs to fundamentals of the evolution of the technology frontier. An important feature of the model is that the process of moving to the frontier involves costly technology adoption. In this way, news of improved growth potential has a positive effect on current hours. As we show, the model also has reasonable implications for stock prices. We estimate our model for data post-1984 and show that the innovations shock accounts for nearly a third of the variation in output at business cycle frequencies. The estimated model also accounts reasonably well for the large gyration in stock prices over this period. Finally, the endogenous adoption mechanism plays a significant role in amplifying other shocks.Business Cycles, Endogenous Technology Adoption, News Shocks, Stock Market.

Price Formation in Double Auctions

We develop a model of information processing and strategy choice for participants in a double auction. Sellers in this model form beliefs that an offer will be accepted by some buyer. Similarly, buyers form beliefs that a bid will be accepted. These beliefs are formed on the basis of observed market data, including frequencies of asks, bids, accepted asks, and accepted bids. Then traders choose an action that maximizes their own expected surplus. The trading activity resulting from these beliefs and strategies is sufficient to achieve transaction prices at competitive equilibrium and complete market efficiency after several periods of trading.Double auction, bounded rationality, experimental economics

Case-Based Expected Utility: Preferences over Actions and Data

We consider a decision-situation in which the available information is given by a data-set. The decision-maker can express preferences over data-set-action pairs. In particular, he can compare different actions given the available information contained in a data-set and also different data-sets w.r.t. to the evidence they give in support of the choice of a given action. Three characteristics of a data-set can be used to evaluate the evidence it provides with respect to the payoff of a given action: the frequency of observations, the number of observations and the relevance of observations to the action under consideration. We state axioms, which ensure that the decision maker is indifferent among data-sets with identical frequencies, but different lengths. We then provide an expected utility representation of preferences, in which the beliefs of the decision maker about the outcome of a given action can be expressed as similarity-weighted frequencies of observed cases, as in BGSS (2005). The similarity weights reflect the subjectively perceived relevance of observations for the specific action.

Evolutive equilibrium selection II: quantal response mechanisms

In this paper we develop a model of Evolutive Quantal Response (EQR) mechanisms, and contrast the outcomes with the Quantal Response Equilibria (QRE) as developed by McKelvey and Palfrey(1995). A clear distinction between the two approaches can be noted; EQR is based on a dynamic formulation of individual choice in the context of evolutionary game theory in which games are played repeatedly in populations, and the aim is to determine both the micro-configuration of strategy choices across the population, and the dynamics of the population frequencies of the strategies played. Quantal Response Equilibria focuses on the more traditional aspects of non-co-operative game theory, i.e. on equilibrium in beliefs regarding strategies.We focus attention on an analytical approach which enables closed form solutions to be constructed. We consider the case of all symmetric binary choice games, which will include analysis of all well known generic games in this context, such as Prisoner's dilemma, Stag-Hunt and Pure coordination games

Hearing in young adults, part I: the effects of attitudes and beliefs toward noise, hearing loss and hearing protector devices

There is great concern regarding the development of noise-induced hearing loss (NIHL) in youth caused by high sound levels during various leisure activities. Health-orientated behavior of young adults might be linked to the beliefs and attitudes toward noise, hearing loss, and hearing protector devices (HPDs). The objective of the current study was to evaluate the effects of attitudes and beliefs toward noise, hearing loss, and HPDs on young adults hearing status. A questionnaire and an audiological test battery were completed by 163 subjects (aged 18-30 years). The questionnaire contained the Youth Attitude to Noise Scale (YANS) and Beliefs about Hearing Protection and Hearing Loss (BAHPHL). A more positive attitude or belief represented an attitude where noise or hearing loss is seen as unproblematic and attitudes and beliefs regarding HPDs is worse. Hearing was evaluated using (high frequency) pure tone audiometry (PTA), transient evoked and distortion product otoacoustic emissions. First, mean differences in hearing between the groups with different attitudes and beliefs were evaluated using one-way analysis of variance (ANOVA). Second, a (2) test was used to examine the usage of HPDs by the different groups with different attitudes and beliefs. Young adults with a positive attitude had significantly more deteriorated hearing and used HPDs less than the other subjects. Hearing conservation programs (HCPs) for young adults should provide information and knowledge regarding noise, hearing loss, and HPDs. Barriers wearing HPDs should especially be discussed. Further, those campaigns should focus on self-experienced hearing related symptoms that might serve as triggers for attitudinal and behavioral changes