Integrating Energy Storage into the Smart Grid: A Prospect Theoretic Approach

In this paper, the interactions and energy exchange decisions of a number of geographically distributed storage units are studied under decision-making involving end-users. In particular, a noncooperative game is formulated between customer-owned storage units where each storage unit's owner can decide on whether to charge or discharge energy with a given probability so as to maximize a utility that reflects the tradeoff between the monetary transactions from charging/discharging and the penalty from power regulation. Unlike existing game-theoretic works which assume that players make their decisions rationally and objectively, we use the new framework of prospect theory (PT) to explicitly incorporate the users' subjective perceptions of their expected utilities. For the two-player game, we show the existence of a proper mixed Nash equilibrium for both the standard game-theoretic case and the case with PT considerations. Simulation results show that incorporating user behavior via PT reveals several important insights into load management as well as economics of energy storage usage. For instance, the results show that deviations from conventional game theory, as predicted by PT, can lead to undesirable grid loads and revenues thus requiring the power company to revisit its pricing schemes and the customers to reassess their energy storage usage choices.Comment: 5 pages, 4 figures, conferenc

A Conceptual Model of Investor Behavior

Based on a survey of behavioral finance literature, this paper presents a descriptive model of individual investor behavior in which investment decisions are seen as an iterative process of interactions between the investor and the investment environment. This investment process is influenced by a number of interdependent variables and driven by dual mental systems, the interplay of which contributes to boundedly rational behavior where investors use various heuristics and may exhibit behavioral biases. In the modeling tradition of cognitive science and intelligent systems, the investor is seen as a learning, adapting, and evolving entity that perceives the environment, processes information, acts upon it, and updates his or her internal states. This conceptual model can be used to build stylized representations of (classes of) individual investors, and further studied using the paradigm of agent-based artificial financial markets. By allowing us to implement individual investor behavior, to choose various market mechanisms, and to analyze the obtained asset prices, agent-based models can bridge the gap between the micro level of individual investor behavior and the macro level of aggregate market phenomena. It has been recognized, yet not fully explored, that these models could be used as a tool to generate or test various behavioral hypothesis.behavioral finance;financial decision making;agent-based artificial financial markets;cognitive modeling;investor behavior

A Conceptual Model of Investor Behavior

Based on a survey of behavioral finance literature, this paper presents a descriptive model of individual investor behavior in which investment decisions are seen as an iterative process of interactions between the investor and the investment environment. This investment process is influenced by a number of interdependent variables and driven by dual mental systems, the interplay of which contributes to boundedly rational behavior where investors use various heuristics and may exhibit behavioral biases. In the modeling tradition of cognitive science and intelligent systems, the investor is seen as a learning, adapting, and evolving entity that perceives the environment, processes information, acts upon it, and updates his or her internal states. This conceptual model can be used to build stylized representations of (classes of) individual investors, and further studied using the paradigm of agent-based artificial financial markets. By allowing us to implement individual investor behavior, to choose various market mechanisms, and to analyze the obtained asset prices, agent-based models can bridge the gap between the micro level of individual investor behavior and the macro level of aggregate market phenomena. It has been recognized, yet not fully explored, that these models could be used as a tool to generate or test various behavioral hypothesis

The survival of the kindest: a theoretical review and empirical investigation of explanations to the evolution of human altruism

Charles Darwin was concerned that his entire theory of evolution by natural selection might be negated by a phenomenon prevalent in a variety of species including humans; namely altruism. If natural selection really favored the survival of the fittest, how could a strategy so irrational as to sacrifice oneself for the well-being of unrelated others survive? A number of scientists have contributed valuable theories to elucidate the �paradox of altruism�. However, in spite of the merits of these theories, there is still dissension about the origins of some particular oddities in the altruistic tendencies of humans, namely why humans act selflessly even when they are unobserved and when they are benefiting a stranger whom they will never meet again. The present doctoral thesis sheds light on answers to the question how human altruism, with all its specific features, could evolve. In the first part, both prominent (e.g., kin selection, reciprocal altruism, etc.) and less recognized theories on the evolution of altruism (e.g., green-beard altruism, the theory of the extended phenotype, etc.) are reviewed. Based on an integrative overview, it is analyzed how much of the altruism puzzle has been solved yet and which specific phenomena are still open to conjecture. With the aim of adding new insights to the issue, the second part of this work presents three empirical studies that investigate in how far prosociality might have been favored (1) by processes of assortation, i.e. the grouping of altruists, and (2) by mating strategies. Indeed, assortation may be invoked as an explanation for the evolution of altruism, if the selfish advantage of egoistic individuals is out-competed by benefits of mutually cooperating altruists. However, to make assortation work as a driver of the evolution of altruism, two prerequisites have to be fulfilled: first, individuals have to be able to distinguish altruists from egoists, and second, altruists have to elect like-minded individuals for mutual cooperation. The first study investigates whether humans are really able to identify altruists based on first impression. To test this, judges watched 20-second silent video clips of unknown target persons and were asked to estimate the behavior of these target persons in a dictator game, which measures prosociality. Estimates were significantly better than chance indicating that humans can identify the altruistic dispositions of unknown persons. The second study investigates whether individuals, in genuine groups, can identify the altruistic tendencies of their daily interaction partners. It further examines whether prosociality influences the formation of friendships in such that individuals assort themselves along the dimension of altruism. Students of six secondary school classes played an anonymous dictator game that functioned as a measure of altruism. Afterwards and unannounced, the students had to estimate their classmates� decisions and did so better than chance. Sociometry revealed that altruists were friends with more altruistic persons than were egoists. The results thus confirm the existence of the two prerequisites for the evolution of altruism through assortation: the predictability of altruistic behavior and the association of altruists. However, although the theory of assortation may explain the evolution of altruism in general, it does not explain the occurrence of inter-individual differences in altruism. The third study deals exactly with this matter. It investigates whether different levels of prosociality might have evolved as a result of different mating strategies, namely inter-individual variations in the propensity to engage in either short-term mating or long-term mating. Specifically, it assumes that prosociality is a necessity for acquiring a long-term partner, especially if an individual has to compensate for deficits in physical attractiveness. To find out whether this idea is true, the study tested whether individuals look out for different levels of prosociality depending on whether they are searching for a short-term mate or a long-term mate. Judges watched short video-clips of target persons and received additional information on the targets� prosociality. Judges were then asked to rate each of the target persons with regard to their desirability as a short-term and long-term mate. While prosociality was a significant predictor for long-term desirability, it was irrelevant when subjects chose a short-term mate. The results suggest that although altruism is costly, at least for some individuals it might be a wretched necessity to obtain access to mates and to reproduce. In the general discussion, the results of all three studies are consolidated. Conclusions are drawn as to the consequences of these findings for the study of human altruism. Finally, directions for future research are presented

Game theory of mind

This paper introduces a model of ‘theory of mind’, namely, how we represent the intentions and goals of others to optimise our mutual interactions. We draw on ideas from optimum control and game theory to provide a ‘game theory of mind’. First, we consider the representations of goals in terms of value functions that are prescribed by utility or rewards. Critically, the joint value functions and ensuing behaviour are optimised recursively, under the assumption that I represent your value function, your representation of mine, your representation of my representation of yours, and so on ad infinitum. However, if we assume that the degree of recursion is bounded, then players need to estimate the opponent's degree of recursion (i.e., sophistication) to respond optimally. This induces a problem of inferring the opponent's sophistication, given behavioural exchanges. We show it is possible to deduce whether players make inferences about each other and quantify their sophistication on the basis of choices in sequential games. This rests on comparing generative models of choices with, and without, inference. Model comparison is demonstrated using simulated and real data from a ‘stag-hunt’. Finally, we note that exactly the same sophisticated behaviour can be achieved by optimising the utility function itself (through prosocial utility), producing unsophisticated but apparently altruistic agents. This may be relevant ethologically in hierarchal game theory and coevolution

Environmental Politics and the Human Being: A New Interdisciplinary Perspective on Motivational Processes and Sustainable Change Behaviour

Never before has the world been globalized to such an extent, which results in a rapid exploitation of global commons and natural resources and has cross-border effects on biological diversity and climate change. As a consequence, there is a new urgency in making global cooperation in environmental politics work. Although there is a broad consensus that systemic change is needed, progress towards the latter - first, through corresponding global agreements and, second, through effective implementation of those policies at home - seems to lag behind expectations. How can these gaps be explained? And how can new scientific insights help to make environmental politics more effective? Notwithstanding the importance of non-behavioural factors as explanations from the 'outside', the author argues that explanations also have to focus on the 'inside', i.e. individual motivation. The key interest is to better understand the motivational process of individuals who are willing to undergo sustainable change behaviour and to conceptualize the results for further research. This turns human behaviour into an important risk factor in global cooperation and cognition into its relevant feature. This work is on conceptualization with a qualitative methodology and is structured as follows: In order to better grasp the meaning of 'poor' systemic change through environmental politics, the introductory part describes global cooperation as a system and identifies three cognitive blindspots, which need further analysis. As a corresponding literature review proves rich in insights but is too implicit for the further analysis, the author provides her own scheme through which the motivational process is sequenced and linked to the system around the individual. This allows new perspectives on how to discuss change behaviour in globally initiated knowledge production, learning and trial and error adaptations. The conclusions consider what the results obtained so far imply for further research on environmental politics

The Influence of Mission Valence and Intrinsic Incentives on Employee Motivation

Worker motivation is relevant to public sector leaders because motivated workers are more efficient and productive, demonstrate positive behaviors, and are happier. Scholars have focused on differing approaches on how to incentivise public service employees using extrinsic or intrinsic incentives. The purpose of this qualitative phenomenological study was to explore the value and effectiveness of mission valence and other intrinsic means used to influence employee motivation and productivity. Using Festinger\u27s cognitive dissonance theory as a guide, a homogeneous group of key participants was interviewed with the intent of answering research questions. The research questions focused on mission valence deployment and on the incentive preferences of 11 purposely selected members of a public sector executive management team. The study incorporated the Giorgi method of data analysis. Following inductive coding procedures, the findings were synthesised into five themes. Findings suggested that mission valence has theoretical appeal to public service leaders, but the antecedent conditions, such as current mission statements have not been implemented. Thus, mission valence within PSGD is a conceptual intrinsic incentive at this point in time. Public service leaders prefer fluidity in crafting blended extrinsic and intrinsic incentive models that are unique to each employee. Consequently, opportunities exist for development of targeted skills development training to supplement existing leadership skills. This aligns with the implications for positive social change because the findings of this study yielded information concerning social, psychological, and motivational nuances and learning that may shape the next generation of public service leaders