Optimistic versus Pessimistic--Optimal Judgemental Bias with Reference Point

This paper develops a model of reference-dependent assessment of subjective beliefs in which loss-averse people optimally choose the expectation as the reference point to balance the current felicity from the optimistic anticipation and the future disappointment from the realisation. The choice of over-optimism or over-pessimism depends on the real chance of success and optimistic decision makers prefer receiving early information. In the portfolio choice problem, pessimistic investors tend to trade conservatively, however, they might trade aggressively if they are sophisticated enough to recognise the biases since low expectation can reduce their fear of loss

Mapping class group and U(1) Chern-Simons theory on closed orientable surfaces

U(1) Chern-Simons theory is quantized canonically on manifolds of the form $M=\mathbb{R}\times\Sigma$, where $\Sigma$ is a closed orientable surface. In particular, we investigate the role of mapping class group of $\Sigma$ in the process of quantization. We show that, by requiring the quantum states to form representation of the holonomy group and the large gauge transformation group, both of which are deformed by quantum effect, the mapping class group can be consistently represented, provided the Chern-Simons parameter $k$ satisfies an interesting quantization condition. The representations of all the discrete groups are unique, up to an arbitrary sub-representation of the mapping class group. Also, we find a $k\leftrightarrow1/k$ duality of the representations.Comment: 17 pages, 3 figure