Related papers: Optimism, overconfidence, and moral hazard

The general use of subjective probabilities to model belief has been justified using many axiomatic schemes. For example, ?consistent betting behavior' arguments are well-known. To those not already convinced of the unique fitness and…

We examine how causal beliefs affect an agent's choices and how feedback on those choices leads to updated causal beliefs. Building on the structural-equations framework for modeling causality, we first examine the general problem of…

This paper studies optimal Public Private Partnerships contract between a public entity and a consortium, in continuous-time and with a continuous payment, with the possibility for the public to stop the contract. The public ("she") pays a…

We present an opinion model founded upon the principles of the bounded confidence interaction among agents. Our objective is to explain the polarization effects inherent to vector-valued opinions. The evolutionary process adheres to the…

We elicit incomplete preferences over monetary gambles with subjective uncertainty. Subjects rank gambles, and these rankings are used to estimate preferences; payments are based on estimated preferences. About 40\% of subjects express…

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…

This paper analyses how risk-taking behaviour and preferences over consumption rank can emerge as a neutrally stable equilibrium when individuals face an anti-coordination task. If in an otherwise homogeneous society information about…

Situations where people have to decide between hurting themselves or another person are at the core of many individual and global conflicts. Yet little is known about how people behave when facing these situations in the lab. Here we report…

We propose a decision-analytical approach to comparing the flexibility of decision situations from the perspective of a decision-maker who exhibits constant risk-aversion over a monetary value model. Our approach is simple yet seems to be…

We study the behavior of for-profit institutions that broadcast reputations to foster trust among market participants. We develop a theoretical model in which buyers and sellers are matched on a platform to engage in transactions involving…

The principle of optimism in the face of uncertainty is prevalent throughout sequential decision making problems such as multi-armed bandits and reinforcement learning (RL). To be successful, an optimistic RL algorithm must over-estimate…

For time-to-event data with finitely many competing risks, the proportional hazards model has been a popular tool for relating the cause-specific outcomes to covariates [Prentice et al. Biometrics 34 (1978) 541--554]. This article studies…

This paper studies how violations of structural assumptions like expected utility and exponential discounting can be connected to basic rationality violations, even though these assumptions are typically regarded as independent building…

We introduce a new model that mimics the strong and sudden effects induced by conformity in tightly interacting human societies. Such effects range from mere crowd phenomena to dramatic political turmoil. The model is a modified version of…

Overconservatism has long been recognized as a major issue with robust optimization, despite its key advantages of tractability, performance guarantee, and limited information. To address this issue, a new criterion is proposed that can…

This paper introduces a rule for policy selection in the presence of estimation uncertainty, explicitly accounting for estimation risk. The rule belongs to the class of risk-aware rules on the efficient decision frontier, characterized as…

Reinforcement learning systems are often concerned with balancing exploration of untested actions against exploitation of actions that are known to be good. The benefit of exploration can be estimated using the classical notion of Value of…

In a data-scarce field such as healthcare, where models often deliver predictions on patients with rare conditions, the ability to measure the uncertainty of a model's prediction could potentially lead to improved effectiveness of decision…

This paper offers a commentary on the use of notions of statistical significance in choice modelling. We review the reasons for uncertainty in parameter estimates, provide a precise discussion on the computation of measures of uncertainty…

Social dilemmas are situations in which collective interests are at odds with private interests: pollution, depletion of natural resources, and intergroup conflicts, are at their core social dilemmas. Because of their multidisciplinarity…