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We consider arbitrage free valuation of European options in Black-Scholes and Merton markets, where the general structure of the market is known, however the specific parameters are not known. In order to reflect this subjective uncertainty…

Mathematical Finance · Quantitative Finance 2017-01-13 Hanno Gottschalk , Elpida Nizami , Marius Schubert

We consider the Bayesian approach to linear inverse problems when the underlying operator depends on an unknown parameter. Allowing for finite dimensional as well as infinite dimensional parameters, the theory covers several models with…

Statistics Theory · Mathematics 2018-09-05 Mathias Trabs

Inverse optimization (IO) is used to estimate unknown parameters of an optimization model from observed decisions. In the data-driven context, the estimated parameters are inherently uncertain, yet quantifying this uncertainty has received…

Optimization and Control · Mathematics 2026-05-26 Timothy C. Y. Chan , Nathan Sandholtz , Nasrin Yousefi

In this paper we consider the estimation of unknown parameters in Bayesian inverse problems. In most cases of practical interest, there are several barriers to performing such estimation, This includes a numerical approximation of a…

Methodology · Statistics 2025-02-07 Neil K. Chada , Ajay Jasra , Mohamed Maama , Raul Tempone

We consider the inverse reinforcement learning problem, that is, the problem of learning from, and then predicting or mimicking a controller based on state/action data. We propose a statistical model for such data, derived from the…

Machine Learning · Statistics 2012-11-27 Sumeetpal S. Singh , Nicolas Chopin , Nick Whiteley

We consider the problem of estimating rare event probabilities, focusing on systems whose evolution is governed by differential equations with uncertain input parameters. If the system dynamics is expensive to compute, standard sampling…

Computation · Statistics 2019-11-05 Siddhant Wahal , George Biros

Bayesian methods are particularly effective for addressing inverse problems due to their ability to manage uncertainties inherent in the inference process. However, employing these methods with costly forward models poses significant…

Computational Engineering, Finance, and Science · Computer Science 2025-10-30 G. Robalo Rei , C. P. Schmidt , J. Nitzler , M. Dinkel , W. A. Wall

Inverse problems, i.e., estimating parameters of physical models from experimental data, are ubiquitous in science and engineering. The Bayesian formulation is the gold standard because it alleviates ill-posedness issues and quantifies…

Machine Learning · Statistics 2024-05-28 Sharmila Karumuri , Ilias Bilionis

Prediction markets are often described as mechanisms that ``aggregate information'' into prices, yet the mapping from dispersed private information to observed market histories is typically noisy, endogenous, and shaped by heterogeneous and…

Mathematical Finance · Quantitative Finance 2026-01-28 Juan Pablo Madrigal-Cianci , Camilo Monsalve Maya , Lachlan Breakey

This article addresses the issue of estimating observation parameters (response and error parameters) in inverse problems. The focus is on cases where regularization is introduced in a Bayesian framework and the prior is modeled by a…

Machine Learning · Statistics 2026-02-13 Jean-François Giovannelli

We consider finite-horizon Markov Decision Processes where parameters, such as transition probabilities, are unknown and estimated from data. The popular distributionally robust approach to addressing the parameter uncertainty can sometimes…

Systems and Control · Electrical Eng. & Systems 2022-10-07 Yifan Lin , Yuxuan Ren , Enlu Zhou

Statistical models can involve implicitly defined quantities, such as solutions to nonlinear ordinary differential equations (ODEs), that unavoidably need to be numerically approximated in order to evaluate the model. The approximation…

Computation · Statistics 2024-09-16 Juho Timonen , Nikolas Siccha , Ben Bales , Harri Lähdesmäki , Aki Vehtari

We deal with Bayesian inference for Beta autoregressive processes. We restrict our attention to the class of conditionally linear processes. These processes are particularly suitable for forecasting purposes, but are difficult to estimate…

Statistics Theory · Mathematics 2010-08-03 R. Casarin , L. Dalla Valle , F. Leisen

We propose a Bayesian inference framework to estimate uncertainties in inverse scattering problems. Given the observed data, the forward model and their uncertainties, we find the posterior distribution over a finite parameter field…

Numerical Analysis · Mathematics 2020-11-17 Ana Carpio , Sergei Iakunin , Georg Stadler

We study empirical and hierarchical Bayes approaches to the problem of estimating an infinite-dimensional parameter in mildly ill-posed inverse problems. We consider a class of prior distributions indexed by a hyperparameter that quantifies…

Statistics Theory · Mathematics 2013-05-30 B. T. Knapik , B. T. Szabó , A. W. van der Vaart , J. H. van Zanten

We study Bayesian methods for large-scale linear inverse problems, focusing on the challenging task of hyperparameter estimation. Typical hierarchical Bayesian formulations that follow a Markov Chain Monte Carlo approach are possible for…

Numerical Analysis · Mathematics 2024-01-05 Khalil A Hall-Hooper , Arvind K Saibaba , Julianne Chung , Scot M Miller

In the previous paper (Inverse Problems, 32, 015010, 2016), a new heuristic mathematical model was proposed for accurate forecasting of prices of stock options for 1-2 trading days ahead of the present one. This new technique uses the…

Mathematical Finance · Quantitative Finance 2022-10-12 Michael V. Klibanov , Aleksander A. Shananin , Kirill V. Golubnichiy , Sergey M. Kravchenko

Bayesian statistical inverse problems are often solved with Markov chain Monte Carlo (MCMC)-type schemes. When the problems are governed by large-scale discrete nonlinear partial differential equations (PDEs), they are computationally…

Numerical Analysis · Mathematics 2019-09-06 Howard C. Elman , Akwum Onwunta

One of the most interesting problems discerned when applying the Black--Scholes model to financial derivatives, is reconciling the deviation between expected and observed values. In our recent work, we derived a new model based on the…

Analysis of PDEs · Mathematics 2014-09-16 Shin-ichi Doi , Yasushi Ota

Bayesian observer and actor models have provided normative explanations for many behavioral phenomena in perception, sensorimotor control, and other areas of cognitive science and neuroscience. They attribute behavioral variability and…

Machine Learning · Computer Science 2025-02-03 Dominik Straub , Tobias F. Niehues , Jan Peters , Constantin A. Rothkopf
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