Testing the limits of contextual constraint: interactions with word frequency and parafoveal preview during fluent reading

Contextual constraint is a key factor affecting a word's fixation duration and its likelihood of being fixated during reading. Previous research has generally demonstrated additive effects of predictability and frequency in fixation times. Studies examining the role of parafoveal preview have shown that greater preview benefit is obtained from more predictable and higher frequency words versus less predictable and lower frequency words. In two experiments, we investigated effects of target word predictability, frequency, and parafoveal preview. A 3 (Predictability: low, medium, high) × 2 (Frequency: low, high) design was used with Preview (valid, invalid) manipulated between experiments. With valid previews, we found main effects of Predictability and Frequency in both fixation time and probability measures, including an interaction in early fixation measures. With invalid preview, we again found main effects of Predictability and Frequency in fixation times, but no evidence of an interaction. Fixation probability showed a weak Predictability effect and Predictability-Frequency interaction. Predictability interacted with Preview in early fixation time and probability measures. Our findings suggest that high levels of contextual constraint exert an early influence during lexical processing in reading. Results are discussed in terms of models of language processing and eye movement control

Frequency Effects on Predictability of Stock Returns

We propose that predictability is a prerequisite for profitability on financial markets. We look at ways to measure predictability of price changes using information theoretic approach and employ them on all historical data available for NYSE 100 stocks. This allows us to determine whether frequency of sampling price changes affects the predictability of those. We also relations between price changes predictability and the deviation of the price formation processes from iid as well as the stock's sector. We also briefly comment on the complicated relationship between predictability of price changes and the profitability of algorithmic trading.Comment: 8 pages, 16 figures, submitted for possible publication to Computational Intelligence for Financial Engineering and Economics 2014 conferenc

Early EEG correlates of word frequency and contextual predictability in reading

Previous research into written language comprehension has been equivocal as to whether word frequency and contextual predictability effects share an early time course of processing. Target word frequency (low, high) and its predictability from prior context (low, high) were manipulated across two-sentence passages. Context sentences were presented in full, followed by word-by-word presentation (300 ms SOA) of target sentences. ERPs were analysed across left-to-right and anterior-to-posterior regions of interest within intervals from 50 to 550 ms post-stimulus. The onset of significant predictability effects (50–80 ms) preceded that of frequency (P1, 80–120 ms), while both main effects were generally sustained through the N400 (350–550 ms). Critically, the frequency-predictability interaction became significant in the P1 and was sustained through the N400, although the specific configuration of effects differed across components. The pattern of findings supports an early, chronometric locus of contextual predictability in recognising words during reading

Predictability of conversation partners

Recent developments in sensing technologies have enabled us to examine the nature of human social behavior in greater detail. By applying an information theoretic method to the spatiotemporal data of cell-phone locations, [C. Song et al. Science 327, 1018 (2010)] found that human mobility patterns are remarkably predictable. Inspired by their work, we address a similar predictability question in a different kind of human social activity: conversation events. The predictability in the sequence of one's conversation partners is defined as the degree to which one's next conversation partner can be predicted given the current partner. We quantify this predictability by using the mutual information. We examine the predictability of conversation events for each individual using the longitudinal data of face-to-face interactions collected from two company offices in Japan. Each subject wears a name tag equipped with an infrared sensor node, and conversation events are marked when signals are exchanged between sensor nodes in close proximity. We find that the conversation events are predictable to some extent; knowing the current partner decreases the uncertainty about the next partner by 28.4% on average. Much of the predictability is explained by long-tailed distributions of interevent intervals. However, a predictability also exists in the data, apart from the contribution of their long-tailed nature. In addition, an individual's predictability is correlated with the position in the static social network derived from the data. Individuals confined in a community - in the sense of an abundance of surrounding triangles - tend to have low predictability, and those bridging different communities tend to have high predictability.Comment: 38 pages, 19 figure

Different roles of similarity and predictability in auditory stream segregation

Sound sources often emit trains of discrete sounds, such as a series of footsteps. Previously, two dif¬ferent principles have been suggested for how the human auditory system binds discrete sounds to¬gether into perceptual units. The feature similarity principle is based on linking sounds with similar characteristics over time. The predictability principle is based on linking sounds that follow each other in a predictable manner. The present study compared the effects of these two principles. Participants were presented with tone sequences and instructed to continuously indicate whether they perceived a single coherent sequence or two concurrent streams of sound. We investigated the influence of separate manipulations of similarity and predictability on these perceptual reports. Both grouping principles affected perception of the tone sequences, albeit with different characteristics. In particular, results suggest that whereas predictability is only analyzed for the currently perceived sound organization, feature similarity is also analyzed for alternative groupings of sound. Moreover, changing similarity or predictability within an ongoing sound sequence led to markedly different dynamic effects. Taken together, these results provide evidence for different roles of similarity and predictability in auditory scene analysis, suggesting that forming auditory stream representations and competition between alter¬natives rely on partly different processes

Short-term returns and the predictability of Finnish stock returns

The predictability of Finnish stock returns is studied using the framework of Ferson and Harvey (1993). We use a conditional asset pricing model where risk premia and risk sensitivities are conditioned on a range of financial information variables. In particular, we study the effect of the return interval on the predictability of short-term stock returns. Using daily, weekly, and monthly Finnish size and industry-sorted portfolio returns, we find that the predictability of returns increases with the length of return interval, but so does the power of the conditional pricing model to explain the predictability. Consistent with earlier results, we report that the time variation in risk premium accounts for most of the predictability. However, the results show also there is a sizable positive interaction between beta and risk premium which seems to increase for smaller companies.asset pricing; predictability; return interval; time aggregation

Retrospective Evaluation of the Five-Year and Ten-Year CSEP-Italy Earthquake Forecasts

On 1 August 2009, the global Collaboratory for the Study of Earthquake Predictability (CSEP) launched a prospective and comparative earthquake predictability experiment in Italy. The goal of the CSEP-Italy experiment is to test earthquake occurrence hypotheses that have been formalized as probabilistic earthquake forecasts over temporal scales that range from days to years. In the first round of forecast submissions, members of the CSEP-Italy Working Group presented eighteen five-year and ten-year earthquake forecasts to the European CSEP Testing Center at ETH Zurich. We considered the twelve time-independent earthquake forecasts among this set and evaluated them with respect to past seismicity data from two Italian earthquake catalogs. In this article, we present the results of tests that measure the consistency of the forecasts with the past observations. Besides being an evaluation of the submitted time-independent forecasts, this exercise provided insight into a number of important issues in predictability experiments with regard to the specification of the forecasts, the performance of the tests, and the trade-off between the robustness of results and experiment duration. We conclude with suggestions for the future design of earthquake predictability experiments.Comment: 43 pages, 8 figures, 4 table

The predictability of monetary policy.

Current best practice in central banking views a high level of monetary policy predictability as desirable. A clear distinction, however, has to be made between short-term and longer-term predictability. While short-term predictability can be narrowly defined as the ability of the public to anticipate monetary policy decisions correctly over short horizons, the broader, ultimately more meaningful concept of longerterm predictability also encompasses the ability of the private sector to understand the monetary policy framework of a central bank, i.e. its objectives and systematic behaviour in reacting to different circumstances and contingencies. In this broader sense, longer-term predictability is also closely related to the credibility of the central bank. This paper reviews the main conceptual issues relating to predictability, both in its short and longer-term dimensions, and discusses how a transparent monetary policy strategy can be – and indeed has been – instrumental in achieving this purpose. This latter aspect is investigated in an overview of the empirical literature, highlighting how financial markets have been increasingly able to correctly anticipate monetary policy decisions for a number of large central banks, including the ECB. The paper also reviews several possible empirical proxies for the less-explored concept of longer-term predictability, which is inherently more diffi cult to measure. JEL Classification: E52, E58, E61.Predictability, central bank transparency, central bank communication.