Measuring loss aversion under ambiguity: a method to make prospect theory completely observable

We propose a simple, parameter-free method that, for the first time, makes it possible to completely observe Tversky and Kahneman’s (1992) prospect theory. While methods exist to measure event weighting and the utility for gains and losses separately, there was no method to measure loss aversion under ambiguity. Our method allows this and thereby it can measure prospect theory’s entire utility function. Consequently, we can properly identify properties of utility and perform new tests of prospect theory. We implemented our method in an experiment and obtained support for prospect theory. Utility was concave for gains and convex for losses and there was substantial loss aversion. Both utility and loss aversion were the same for risk and ambiguity, as assumed by prospect theory, and sign-comonotonic trade-off consistency, the central condition of prospect theory, held

Operator theory and function theory in Drury-Arveson space and its quotients

The Drury-Arveson space $H^2_d$, also known as symmetric Fock space or the $d$-shift space, is a Hilbert function space that has a natural $d$-tuple of operators acting on it, which gives it the structure of a Hilbert module. This survey aims to introduce the Drury-Arveson space, to give a panoramic view of the main operator theoretic and function theoretic aspects of this space, and to describe the universal role that it plays in multivariable operator theory and in Pick interpolation theory.Comment: Final version (to appear in Handbook of Operator Theory); 42 page

The Fifth Stage in Water Management: Policy Lessons for Water Governance

Effective management of water resources is a critical policy issue globally. Using a framework developed by Turton, and a common set of characteristics describing key stages of water demand, we examine the effectiveness of isolated technical (e.g. irrigation upgrades) and allocative (e.g. buyback) efficiency for reducing water demand to sustainable levels. We base our analysis on Australia's water reform context which offers an advanced example of applying these levers to achieve allocative and technical efficiency. The study is motivated by appreciation of the benefits from increased policy flexibility and adaptability in response to: potential transformations toward inflexible production systems; uncertainty associated with impacts of climate change on future water reliability; and the need for increased possible future equity between uses/users (productive/consumptive, environmental, cultural). Our results highlight risk issues that rarely feature in current policy assurance reviews or performance assessments, and enables a clearer representation of uncertainty in future policy choices in many global settings with respect to water demand reduction.A. Loch, D. Adamson, N.P. Dumbrel

Cowries in the archaeology of West Africa: the present picture

Despite the perceived importance of cowrie shells as indicators of long-distance connections in the West African past, their distribution and consumption patterns in archaeological contexts remain surprisingly underexplored, a gap that is only partly explicable by the sparse distribution of archaeological sites within the sub-continent. General writings on the timeline of importation of cowries into West Africa often fail to take into account the latest archaeological evidence and rely instead on accounts drawn from historical or ethnographic documents. This paper is based on a first-hand assessment of over 4500 shells from 78 sites across West Africa, examining chronology, shell species and processes of modification to assess what distribution patterns can tell us about the history of importation and usage of cowries. These first-hand analyses are paralleled by a consideration of published materials. We re-examine the default assumption that two distinct routes of entry existed — one overland from North Africa before the fifteenth century, another coming into use from the time sea links were established with the East African coast and becoming predominant by the middle of the nineteenth century. We focus on the eastern part of West Africa, where the importance of imported cowries to local communities in relatively recent periods is well known and from where we have a good archaeological sample. The conclusion is that on suitably large assemblages shell size can be an indication of provenance and that, while the present archaeological picture seems largely to confirm historical sources, much of this may be due to the discrepancy in archaeological data available from the Sahara/Sahel zone compared to the more forested regions of the sub-continent. Future archaeological work will clarify this matter

Violations of betweenness and choice shifts in groups

In decision theory, the betweenness axiom postulates that a decision maker who chooses an alternative A over another alternative B must also choose any probability mixture of A and B over B itself and can never choose a probability mixture of A and B over A itself. The betweenness axiom is a weaker version of the independence axiom of expected utility theory. Numerous empirical studies documented systematic violations of the betweenness axiom in revealed individual choice under uncertainty. This paper shows that these systematic violations can be linked to another behavioral regularity\u2014choice shifts in a group decision making. Choice shifts are observed if an individual faces the same decision problem but makes a different choice when deciding alone and in a group