On the Aggregation of Subjective Inputs from Multiple Sources

When we have a population of individuals or artificially intelligent agents possessing diverse subjective inputs (e.g. predictions, opinions, etc.) about a common topic, how should we collect and combine them into a single judgment or estimate? This has long been a fundamental question across disciplines that concern themselves with forecasting and decision-making, and has attracted the attention of computer scientists particularly on account of the proliferation of online platforms for electronic commerce and the harnessing of collective intelligence. In this dissertation, I study this problem through the lens of computational social science in three main parts: (1) Incentives in information aggregation: In this segment, I analyze mechanisms for the elicitation and combination of private information from strategic participants, particularly crowdsourced forecasting tools called prediction markets. I show that (a) when a prediction market implemented with a widely used family of algorithms called market scoring rules (MSRs) interacts with myopic risk-averse traders, the price process behaves like an opinion pool, a classical family of belief combination rules, and (b) in an MSR-based game-theoretic model of prediction markets where participants can influence the predicted outcome but some of them have a non-zero probability of being non-strategic, the equilibrium is one of two types, depending on this probability -- either collusive and uninformative or partially revealing; (2) Aggregation with non-strategic agents: In this part, I am agnostic to incentive issues, and focus on algorithms that uncover the ground truth from a sequence of noisy versions. In particular, I present the design and analysis of an approximately Bayesian algorithm for learning a real-valued target given access only to censored Gaussian signals, that performs asymptotically almost as well as if we had uncensored signals; (3) Market making in practice: This component, although tied to the two previous themes, deals more directly with practical aspects of aggregation mechanisms. Here, I develop an adaptation of an MSR to a nancial market setting called a continuous double auction, and document its experimental evaluation in a simulated market ecosystem

Credit bureaus between risk-management, creditworthiness assessment and prudential supervision

"This text may be downloaded for personal research purposes only. Any additional reproduction for other purposes, whether in hard copy or electronically, requires the consent of the author. If cited or quoted, reference should be made to the full name of the author, the title, the working paper or other series, the year, and the publisher."This paper discusses the role and operations of consumer Credit Bureaus in the European Union in the context of the economic theories, policies and law within which they work. Across Europe there is no common practice of sharing the credit data of consumers which can be used for several purposes. Mostly, they are used by the lending industry as a practice of creditworthiness assessment or as a risk-management tool to underwrite borrowing decisions or price risk. However, the type, breath, and depth of information differ greatly from country to country. In some Member States, consumer data are part of a broader information centralisation system for the prudential supervision of banks and the financial system as a whole. Despite EU rules on credit to consumers for the creation of the internal market, the underlying consumer data infrastructure remains fragmented at national level, failing to achieve univocal, common, or defined policy objectives under a harmonised legal framework. Likewise, the establishment of the Banking Union and the prudential supervision of the Euro area demand standardisation and convergence of the data used to measure debt levels, arrears, and delinquencies. The many functions and usages of credit data suggest that the policy goals to be achieved should inform the legal and institutional framework of Credit Bureaus, as well as the design and use of the databases. This is also because fundamental rights and consumer protection concerns arise from the sharing of credit data and their expanding use

Intellectual Property Rights and Biotechnology: How to Improve the Present Patent System

This paper discusses the problems related to assigning or denying intellectual property rights to biotechnological innovation, with particular reference to agro-biotechnologies and the relations between developed and developing countries. There are two types of problems to consider. First, the aim of protecting property rights on innovations is to create incentives towards research and innovation in general, which in some cases may be beneficial to society, in others not so. If the assignment of an intellectual property right does not guarantee the potential beneficial use of new knowledge, not assigning rights would not prevent its potentially dangerous utilization. Secondly, the holder of an intellectual property right has a power of exclusion which limits access by others to the newly produced knowledge. However, the production of new knowledge is very often a process which starts from a base of existing knowledge. Hence, discouraging access to existing knowledge also means discouraging the process of producing new knowledge. Paradoxically then, in protecting intellectual property we obtain the opposite result to the one expected and desired. Moreover, the holder of an intellectual property right may end up with excessive market power when commercializing the innovation. This paper will try to show that these problems cannot be solved, as sometimes is suggested, by denying protection of property rights on innovations, but by improving the procedures for awarding these rights and accompanying them with other measures such as liability rules governing potential damage and also antitrust measures.Intellectual property rights, Biotechnology, Patent system

Policymaking under scientific uncertainty

Policymakers who seek to make scientifically informed decisions are constantly confronted by scientific uncertainty and expert disagreement. This thesis asks: how can policymakers rationally respond to expert disagreement and scientific uncertainty? This is a work of nonideal theory, which applies formal philosophical tools developed by ideal theorists to more realistic cases of policymaking under scientific uncertainty. I start with Bayesian approaches to expert testimony and the problem of expert disagreement, arguing that two popular approaches— supra-Bayesianism and the standard model of expert deference—are insufficient. I develop a novel model of expert deference and show how it can deal with many of these problems raised for them. I then turn to opinion pooling, a popular method for dealing with disagreement. I show that various theoretical motivations for pooling functions are irrelevant to realistic policymaking cases. This leads to a cautious recommendation of linear pooling. However, I then show that any pooling method relies on value judgements, that are hidden in the selection of the scoring rule. My focus then narrows to a more specific case of scientific uncertainty: multiple models of the same system. I introduce a particular case study involving hurricane models developed to support insurance decision-making. I recapitulate my analysis of opinion pooling in the context of model ensembles, confirming that my hesitations apply. This motivates a shift of perspective, to viewing the problem as a decision theoretic one. I rework a recently developed ambiguity theory, called the confidence approach, to take input from model ensembles. I show how it facilitates the resolution of the policymaker’s problem in a way that avoids the issues encountered in previous chapters. This concludes my main study of the problem of expert disagreement. In the final chapter, I turn to methodological reflection. I argue that philosophers who employ the mathematical methods of the prior chapters are modelling. Employing results from the philosophy of scientific models, I develop the theory of normative modelling. I argue that it has important methodological conclusions for the practice of formal epistemology, ruling out popular moves such as searching for counterexamples

Turning a Blind Eye: Wall Street Finance of Predatory Lending

Today, Wall Street finances up to eighty percent of subprime home loans through securitization. The subprime sector, which is designed for borrowers with blemished credit, has been dogged by predatory lending charges, many of which have been substantiated. As subprime securitization has grown, so have charges that securitization turns a blind eye to financing abusive loans. In this paper, we examine why secondary market discipline has failed to halt the securitization of predatory loans. When investors buy securities backed by predatory loans, they face a classic lemons problem in the form of credit risk, prepayment risk, and litigation risk. Securitization exacerbates all three risks by unbundling the mortgage process, giving rise to adverse selection. In theory, the lemons problem should cause investors to flee the market for subprime mortgage-backed securities or demand a risk premium commensurate with the worst quality loans. Instead, securitization allays adverse selection concerns by structuring transactions so that risk-averse investors receive their agreed-upon return without needing to screen out predatory loans. In addition to pricing, the secondary market uses structured finance and deal terms, instead of filtering, to manage credit, prepayment, and litigation risk. Furthermore, structured finance provides incentives to securitize predatory loans. Voluntary due diligence could help ameliorate the problem, but those efforts remain sparse. To alter this perverse incentive structure, we propose legislation to impose a duty on secondary market assignees of subprime home loans to investigate and police predatory lenders

New ways of accountancy

The problems that are seeing by paper is to examine to what extent accounting reports can provide us with the true picture of company performance and finds the way how to broaden accounting reports in order to incorporate other relevant information (News in TV, newspapers, education, moral standards, goal achievements, position on the market, a life cycle period, computer literacy, future investment plans and possible mergers, a questions, women position etc.). It is a task of this work to examine is such an accountancy possible based on the cases of published company reports .accounting general; creative accountancy; IFRS; social responsibility; accounting methods; IFRS; GAAP; new ways

Four Contributions to Experimental Economics

In 2002 the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Daniel Kahneman and Vernon Smith. It was not only a distinction for the work of the two laureates, but also for the field of experimental economics. Motivating the prize for the laureates the committee stated: "Controlled laboratory experiments have emerged as a vital component of economic research and, in certain instances, experimental results have shown that basic postulates in economic theory should be modified." The four studies in the work at hand demonstrate the variety of fields on which the methods of experimental economics can be applied to. The first study deals with culture and presentation effects. Two continuous prisoner's dilemma games where decision makers can choose an individual level of cooperation from a given range of possible actions are introduced. Both games represent the same logical and strategical problem. In the first game, a positive transfer creates a positive externality for the opposite player. In the second game, this externality is negative. Accomplishing a cross-cultural experimental study involving subjects from the West Bank and Jerusalem (Israel) we test for a strategic presentation bias applying these two games. Subjects in the West Bank show a substantially higher cooperation level in the positive externality treatment than in the one with negative externality. In Jerusalem no presentation effect is observed. Discussing our findings, we argue that a cross-cultural comparison leads to only partially meaningful and opposed results if only one treatment condition is evaluated. In our setting cooperation was significantly higher in the West Bank than in Jerusalem in the game with positive externality. In contrast cooperation was significantly higher in Jerusalem than in the West Bank in the game with negative externality. We therefore suggest a complementary application and consideration of different presentations of identical decision problems within cross-cultural research. Chapter III investigates Incentives and Production Technology in Teams. We show how reward mechanisms, either egalitarian or discriminating, and production technologies, given by production functions of either complementarity or substitutability, affect effort provision in teams. Our experimental results demonstrate that unequal rewards can potentially increase productivity by facilitating coordination, and that the effect strongly interacts with the exact shape of the production function. Our findings suggest that designing (production) tasks in a way that makes workers' efforts complements i.e., the impact of a worker's input increases in the size of the others' input, rather than substitutes may lead to a major cost advantage. Since peer pressure constitutes a complementarity in effort exertion, the mere strengthening of social ties amongst the workforce alone might have a strong impact on productivity. We show that whenever the organizational technology is one of complementarity, the usage of a discriminating reward scheme might be potentially efficiency-enhancing. Thus equal treatment of equals is neither a necessary nor a sufficient prerequisite for eliciting high performance in teams. Chapter IV tests the success of three stationary concepts in describing experimental data gathered in oligopoly markets. The concepts experimentally tested are Nash equilibrium, impulse balance equilibrium and payoff-sampling equilibrium. The latter two equilibria are behavioral concepts that either depend on tendencies to play the ex-post best strategy (impulse balance equilibrium) or on samples of payoffs for each strategy (payoff-sampling equilibrium). In the experiment two different cyclic duopoly games were played and the aggregated frequencies of entering an occupied market were the test criteria to be described by the three concepts. The comparison of the three concepts with mixed strategies shows that the order of performance from best to worst is as follows: payoff-sampling equilibrium, impulse balance equilibrium, and Nash equilibrium. In addition our data exhibit a weak but significant tendency over time in the direction of coordination at a pure strategy equilibrium. The last chapter, chapter V examines learning behavior in repeated 2x2 games. In this study we introduce four new learning models: impulse balance learning, impulse matching learning, action-sampling learning, and payoff-sampling learning. With this models and together with the models of self-tuning EWA learning and reinforcement learning, we conduct simulations over 12 different 2x2-games and compare the results with experimental data. Hereby, the learning rules have to meet two challenges: First, can they reproduce the aggregate behavior of a human population and second do they adequately describe the observed behavior of a single individual? Our results are twofold: while our newly introduced models are able to capture the distribution of decisions on the aggregate level much better then self-tuning EWA does, self-tuning EWA describes the individual data in a more accurate way then our models do

Are EU Environmental Policies Too Demanding for New Members States?

In 2004, ten new states entered the European Union. Relative to the pre-2004 member states, these accession states have lower environmental standards, and some worry that it will be too demanding for these new EU members to fully comply with European environmental provisions. In this paper, we assess one rationale for such harmonization. Specifically, we analyze the determinants of environmental policies’ stringency, and show that differences in corruption levels are more important as explanatory factor when compared to income differentials. Since high levels of corruption characterize some countries in the enlarged EU, we argue that this is a good reason for an upward harmonization of environmental policies at the EU level.Corruption, European union, Environmental policy