3,939 research outputs found
Quantization of Prior Probabilities for Hypothesis Testing
Bayesian hypothesis testing is investigated when the prior probabilities of
the hypotheses, taken as a random vector, are quantized. Nearest neighbor and
centroid conditions are derived using mean Bayes risk error as a distortion
measure for quantization. A high-resolution approximation to the
distortion-rate function is also obtained. Human decision making in segregated
populations is studied assuming Bayesian hypothesis testing with quantized
priors
Communication Strategies for Low-Latency Trading
The possibility of latency arbitrage in financial markets has led to the
deployment of high-speed communication links between distant financial centers.
These links are noisy and so there is a need for coding. In this paper, we
develop a gametheoretic model of trading behavior where two traders compete to
capture latency arbitrage opportunities using binary signalling. Different
coding schemes are strategies that trade off between reliability and latency.
When one trader has a better channel, the second trader should not compete.
With statistically identical channels, we find there are two different regimes
of channel noise for which: there is a unique Nash equilibrium yielding ties;
and there are two Nash equilibria with different winners.Comment: Will appear in IEEE International Symposium on Information Theory
(ISIT), 201
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