Cognitive biases, heuristics and decision-making in design for behaviour change

Copyright @ 2012 Social Science Electronic PublishingMuch human behaviour can be seen as decision-making, and so understanding and influencing those decision-making processes could be an important component in design for behaviour change. This paper examines the 'heuristics and biases' approach to modelling decision-making, and attempts to extract insights which are relevant to designers working to influence user behaviour for social or environmental benefit -- either by exploiting biases, or helping to counter those which lead to undesirable behaviour. Areas covered include a number of specific cognitive biases in detail, and the alternative perspective of Gigerenzer and others, who contend (following Herbert Simon) that many heuristics potentially leading to biases are actually ecologically rational, and part of humans' adaptive responses to situations. The design relevance of this is briefly considered, and implications for designers are summarised

REBA: A Refinement-Based Architecture for Knowledge Representation and Reasoning in Robotics

This paper describes an architecture for robots that combines the complementary strengths of probabilistic graphical models and declarative programming to represent and reason with logic-based and probabilistic descriptions of uncertainty and domain knowledge. An action language is extended to support non-boolean fluents and non-deterministic causal laws. This action language is used to describe tightly-coupled transition diagrams at two levels of granularity, with a fine-resolution transition diagram defined as a refinement of a coarse-resolution transition diagram of the domain. The coarse-resolution system description, and a history that includes (prioritized) defaults, are translated into an Answer Set Prolog (ASP) program. For any given goal, inference in the ASP program provides a plan of abstract actions. To implement each such abstract action, the robot automatically zooms to the part of the fine-resolution transition diagram relevant to this action. A probabilistic representation of the uncertainty in sensing and actuation is then included in this zoomed fine-resolution system description, and used to construct a partially observable Markov decision process (POMDP). The policy obtained by solving the POMDP is invoked repeatedly to implement the abstract action as a sequence of concrete actions, with the corresponding observations being recorded in the coarse-resolution history and used for subsequent reasoning. The architecture is evaluated in simulation and on a mobile robot moving objects in an indoor domain, to show that it supports reasoning with violation of defaults, noisy observations and unreliable actions, in complex domains.Comment: 72 pages, 14 figure

Comparative analysis of alternative credit risk models : an application on German middle market loan portfolios

In recent years new methods and models have been developed to quantify credit risk on a portfolio basis. CreditMetrics (tm), CreditRisk+, CreditPortfolio (tm) are among the best known and many others are similar to them. At first glance they are quite different in their approaches and methodologies. A comparison of these models especially with regard to their applicability on typical middle market loan portfolios is in the focus of this study. The analysis shows that differences in the results of an application of the models on a certain loan portfolio is mainly due to different approaches in approximating default correlations. That is especially true for typically non-rated medium-sized counterparties. On the other hand distributional assumptions or different solution techniques in the models are more or less compatible.Seit einigen Jahren finden sich in Wissenschaft und Bankpraxis neue Methoden und Modelle, um Risiken von Kreditportfolios zu messen. Zu den bekanntesten Vertretern gehören CreditMetrics(tm) , CreditRisk+ und CreditPortfolioView(tm) , welche sich auf den ersten Blick stark im Ansatz und in der Methodik unterscheiden. Im Mittelpunkt der vorliegenden Studie steht ein Vergleich dieser Modelle und zwar insbesondere hinsichtlich ihrer Anwendbarkeit auf ein typisches Portfolio aus mittelständischen Bankkrediten. Die Analyse zeigt, dass Unterschiede in den Ergebnissen zweier Modelle für ein und dasselbe Portfolio vor allem auf unterschiedliche Verfahren in der Approximation von Ausfallkorrelationen zurückzuführen sind. Dies gilt insbesondere für Kredite an nicht-geratete mittelständische Unternehmen

Open Doors, Trap Doors, and the Law

Accordingly, the term open door will be used to refer to situations in which an individual can exercise, ex post, a right to rescind or withdraw from (and thus reverse) an ex ante commitment or decision. More specifically, within the realm of contract theory, this article focuses on implications for contract formation interpretation and the design of contractual default rules

Hard Cases Under the Convention on the International Sale of Goods: A Proposed Taxonomy of Interpretative Challenges

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Hard Cases Under the Convention on the International Sale of Goods: A Proposed Taxonomy of Interpretative Challenges

CISG was formally uniform at the time of its adoption. It used the same words in all of the jurisdictions adopting it. But uniform words are not enough to guarantee uniform application. For many commentators, in fact, the most significant impediment to the continued existence or efficacy of the CISG is the lack of uniform interpretive outcomes in hard CISG cases – cases where a CISG provision is vague either on its face or in its application. Without greater uniformity of interpretive outcomes, these commentators suggest, the CISG will, over time, fail to supply standard solutions to similar contracting problems and thus fail to supply the predictability that parties need. In this Article, Professor Allen Blair argues that these commentators start with an exaggerated expectation about the kind and degree of uniformity called for by the CISG and demanded by parties. Contrary to the standard conception of CISG interpretation, uniformity of interpretive outcomes is an improper goal with respect to CISG provisions cast as open-textured standards, and any effort to harden these standards into rigid rules could, in fact, undermine the efficiency goals of contracting parties

The trust preferred CDO market: from start to (expected) finish

This paper investigates the development, issuance, structuring, and expected performance of the trust preferred securities collateralized debt obligation (TruPS CDO) market. Developed as a way to provide capital markets access to smaller banks, thrifts, insurance companies, and real estate investment trusts (REITs) by pooling the issuance of TruPS into marketable CDOs, the market grew to $60 billion of issuance from its inception in 2000 through its abrupt halt in 2007. As evidenced by rating agency downgrades, current performance, and estimates from the authors' own model, TruPS CDOs are likely to perform poorly. Using data and valuation software from the leading provider of such information, they estimate that large numbers of the subordinated bonds and some senior bonds will be either fully or partially written down, even if no further defaults occur going forward. The primary reason for these losses is that the underlying collateral of TruPS CDOs is small, unrated banks whose primary asset is commercial real estate (CRE). During their years of greatest issuance from 2003 to 2007, the booming real estate market and record low number of bank failures masked the underlying risks that are now manifest. Another reason for the poor performance of bank TruPS CDOs is that smaller banks became a primary investor in the mezzanine tranches of bank TruPS CDOs, something that is also complicating regulators' resolutions of failed banks. To understand how this came about, the authors explore in detail the symbiotic relationship between dealers and rating agencies and how they modeled and sold TruPS CDOs. In their concluding comments, the authors provide several lessons learned for policymakers, regulators, and market participants.Asset-backed financing