Related papers: Information, Utility & Bounded Rationality
We study the utility maximization problem for power utility random fields in a semimartingale financial market, with and without intermediate consumption. The notion of an opportunity process is introduced as a reduced form of the value…
The fundamental lower bounds of the thermodynamic energy cost (work) needed for the measurement and the erasure of information are found. The lower bound for the erasure vindicates the "Landauer's principle" for a special case, but…
This paper describes a novel approach to planning which takes advantage of decision theory to greatly improve robustness in an uncertain environment. We present an algorithm which computes conditional plans of maximum expected utility. This…
Resource-constrained systems are prevalent in communications. Such a system is composed of many components but only some of them can be allocated with resources such as time slots. According to the amount of information about the system,…
We study linear policy approximations for the risk-conscious operation of an industrial energy system with uncertain wind power, significant and variable electricity demand, and high thermal output, as found in a modern foundry. The system…
The Free Energy Principle (FEP) states that under suitable conditions of weak coupling, random dynamical systems with sufficient degrees of freedom will behave so as to minimize an upper bound, formalized as a variational free energy, on…
Understanding the connections between information and thermodynamics has been among the most visible applications of stochastic thermodynamics. While recent theoretical advances have established that the second law of thermodynamics sets…
Thermodynamics and information have intricate inter-relations. The justification of the fact that information is physical, is done by inter-linking information and thermodynamics - through Landauer's principle. This modern approach towards…
We consider a discrete time financial market with proportional transaction costs under model uncertainty, and study a num\'eraire-based semi-static utility maximization problem with an exponential utility preference. The randomization…
How do organisms recognize their environment by acquiring knowledge about the world, and what actions do they take based on this knowledge? This article examines hypotheses about organisms' adaptation to the environment from machine…
Making decisions freely presupposes that there is some indeterminacy in the environment and in the decision making engine. The former is reflected on the behavioral changes due to communicating: few changes indicate rigid environments;…
Adaptive systems -- such as a biological organism gaining survival advantage, an autonomous robot executing a functional task, or a motor protein transporting intracellular nutrients -- must model the regularities and stochasticity in their…
A decision-maker periodically acquires information about a changing state, controlling both the timing and content of updates. I characterize optimal policies using a decomposition of the dynamic problem into optimal stopping and static…
An agent acquires a costly flexible signal before making a decision. We explore to what degree knowledge of the agent's information costs helps predict her behavior. We establish an impossibility result: learning costs alone generate no…
We study a continuous-time expected utility maximization problem in which the investor at maturity receives the value of a contingent claim in addition to the investment payoff from the financial market. The investor knows nothing about the…
Individual components such as cells, particles, or agents within a larger system often require detailed understanding of their relative position to act accordingly, enabling the system as a whole to function in an organised and efficient…
Accurate information processing is crucial both in technology and in nature. To achieve it, any information processing system needs an initial supply of resources away from thermal equilibrium. Here we establish a fundamental limit on the…
Logics for resource-bounded agents have been getting more and more attention in recent years since they provide us with more realistic tools for modelling and reasoning about multi-agent systems. While many existing approaches are based on…
We derive asymptotically optimal statistical decision rules for discrete choice problems when payoffs depend on a partially-identified parameter $\theta$ and the decision maker can use a point-identified parameter $\mu$ to deduce…
Organisms adapt to volatile environments by integrating sensory information with internal memory, yet their information processing is constrained by resource limitations. Such limitations can fundamentally alter optimal estimation…