Related papers: Rational Decision-Making Under Uncertainty: Observ…
We give elementary examples within a framework for studying decisions under uncertainty where probabilities are only roughly known. The framework, in gambling terms, is that the size of a bet is proportional to the gambler's perceived…
In the paper it is proven that the two-players turn-based stochastic game "Risk or Safety" has a unique solution. Both players need to play the same strategy if they want to maximize their winning chances. An analytical method based on the…
We study the problem of learning a most biased coin among a set of coins by tossing the coins adaptively. The goal is to minimize the number of tosses until we identify a coin i* whose posterior probability of being most biased is at least…
Consider a coin tossing experiment which consists of tossing one of two coins at a time, according to a renewal process. The first coin is fair and the second has probability $1/2 + \theta$, $\theta \in [-1/2,1/2]$, $\theta$ unknown but…
Data visualizations are standard tools for assessing and communicating risks. However, it is not always clear which designs are optimal or how encoding choices might influence risk perception and decision-making. In this paper, we report…
In an earlier experiment, participants played a perfect information game against a computer, which was programmed to deviate often from its backward induction strategy right at the beginning of the game. Participants knew that in each game,…
This paper examines the impact of cognitive biases on financial decision-making through a static Bayesian game framework. While traditional economic theory assumes fully rational investors, real-world choices are often shaped by loss…
The paper studies one-shot two-player games with non-Bayesian uncertainty. The players have an attitude that ranges from optimism to pessimism in the face of uncertainty. Given the attitudes, each player forms a belief about the set of…
Data visualizations are standard tools for assessing and communicating risks. However, it is not always clear which designs are optimal or how encoding choices might influence risk perception and decision-making. In this paper, we report…
We derive robust predictions in games involving flexible information acquisition, also known as rational inattention (Sims 2003). These predictions remain accurate regardless of the specific methods players employ to gather information.…
This paper studies a risk-sensitive decision-making problem under uncertainty. It considers a decision-making process that unfolds over a fixed number of stages, in which a decision-maker chooses among multiple alternatives, some of which…
We consider games of chance played by someone with external capital that cannot be applied to the game and determine how this affects risk-adjusted optimal betting. Specifically, we focus on Kelly optimization as a metric, optimizing the…
Poker is ideal for testing automated reasoning under uncertainty. It introduces uncertainty both by physical randomization and by incomplete information about opponents hands.Another source OF uncertainty IS the limited information…
We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a…
Sports betting's recent federal legalisation in the USA coincides with the golden age of machine learning. If bettors can leverage data to reliably predict the probability of an outcome, they can recognise when the bookmaker's odds are in…
We study the asymptotic behavior of the ratio of total return (or total profit) to total amount bet in a casino game. While the limit is well understood when the sequence of wagers is independent and identically distributed, here we…
We introduce an evolutionary game with feedback between perception and reality, which we call the reality game. It is a game of chance in which the probabilities for different objective outcomes (e.g., heads or tails in a coin toss) depend…
Decision making in uncertain and risky environments is a prominent area of research. Standard economic theories fail to fully explain human behaviour, while a potentially promising alternative may lie in the direction of Reinforcement…
We conducted an experiment where participants played a perfect-information game against a computer, which was programmed to deviate often from its backward induction strategy right at the beginning of the game. Participants knew that in…
We construct a financial "Turing test" to determine whether human subjects can differentiate between actual vs. randomized financial returns. The experiment consists of an online video-game (http://arora.ccs.neu.edu) where players are…