2,072 research outputs found
Foraging as an evidence accumulation process
A canonical foraging task is the patch-leaving problem, in which a forager
must decide to leave a current resource in search for another. Theoretical work
has derived optimal strategies for when to leave a patch, and experiments have
tested for conditions where animals do or do not follow an optimal strategy.
Nevertheless, models of patch-leaving decisions do not consider the imperfect
and noisy sampling process through which an animal gathers information, and how
this process is constrained by neurobiological mechanisms. In this theoretical
study, we formulate an evidence accumulation model of patch-leaving decisions
where the animal averages over noisy measurements to estimate the state of the
current patch and the overall environment. Evidence accumulation models belong
to the class of drift diffusion processes and have been used to model decision
making in different contexts. We solve the model for conditions where foraging
decisions are optimal and equivalent to the marginal value theorem, and perform
simulations to analyze deviations from optimal when these conditions are not
met. By adjusting the drift rate and decision threshold, the model can
represent different strategies, for example an increment-decrement or counting
strategy. These strategies yield identical decisions in the limiting case but
differ in how patch residence times adapt when the foraging environment is
uncertain. To account for sub-optimal decisions, we introduce an
energy-dependent utility function that predicts longer than optimal patch
residence times when food is plentiful. Our model provides a quantitative
connection between ecological models of foraging behavior and evidence
accumulation models of decision making. Moreover, it provides a theoretical
framework for potential experiments which seek to identify neural circuits
underlying patch leaving decisions
Rational Decision-Making in Business Organizations
Lecture to the memory of Alfred Nobel, December 8, 1978decision making;
Home bias in financial markets: robust satisficing with info gaps
The observed patterns of equity portfolio allocation around the world are at odds with predictions from a capital asset pricing model (CAPM). What has come to be called the âhome-biasâ phenomenon is that investors tend to hold a disproportionately large share of their equity portfolio in home country stocks as compared with predictions of the CAPM. This paper provides an explanation of the home-bias phenomenon based on information-gap decision theory. The decision concept that is used here is that profit is satisficed and robustness to uncertainty is maximized rather than expected profit being maximized. Furthermore, uncertainty is modeled nonprobabilistically with info-gap models of uncertainty, which can be viewed as a possible quantification of Knightian uncertainty.
An Emergent Economics of Ecosystem Management
Economics is an evolving and emerging field of study, so is the management of ecosystems. As such, this paper delineates the co-evolution of economic evaluation that reflects the various recognized ecosystem management approaches of anticipative, adaptive and capacitive ecosystem management. Each management approach is critiqued and from this theoretical analysis an emergent approach for the management of ecosystem is put forward, which accordingly suggests an alternative methodological approach for economic evaluations.Complexity, creativity, economic evaluation, ecosystem management, evolution, open systems, rationality, Resource /Energy Economics and Policy,
Behavioral economics as applied to firms: a primer
We discuss the literatures on behavioral economics, bounded rationality and experimental economics as they apply to firm behavior in markets. Topics discussed include the impact of imitative and satisficing behavior by firms, outcomes when managers care about their position relative to peers, the benefits of employing managers whose objective diverges from profit-maximization (including managers who are overconfident or base pricing decisions on sunk costs), the impact of social preferences on the ability to collude, and the incentive for profit-maximizing firms to mimic irrational behavior.Behavioral economics, bounded rationality, experimental economics, oligopoly, antitrust
Behavioral Economics as Applied to Firms: A Primer
We discuss the literatures on behavioral economics, bounded rationality and experimental economics as they apply to firm behaviour in markets. Topics discussed include the impact of imitative and satisficing behavior by firms, outcomes when managers care about their position relative to peers, the benefits of employing managers whose objective diverges from profit-maximization (including managers who are overconfident or base pricing decisions on sunk costs), the impact of social preferences on the ability to collude, and the incentive for profit-maximizing firms to mimic irrational behavior.behavioral economics, firms, oligopoly, bounded rationality, collusion
A cybernetic decision model of market entry
This article analyzes a firm's decision of entering a new market - or staying outside - and considers five decision models - optimizing, satisficing, incremental, cybernetic, and random - and their domain of applicability in order to discuss how fit they are in describing this specific decision. Because the cybernetic decision strategy appears to be the most appropriate to deal with the entry decision, the work goes deeper into this model focusing on the degree of uncertainty that the environment represents to the decision makers and to the state of the conflict of interest that arises because this decision implies a coordination problem
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