Related papers: Optimism, overconfidence, and moral hazard
Models necessarily capture only parts of a reality. Prediction models aim at capturing a future reality. In this paper we address the question of how the future is constructed (or: imagined) in an investment context where market…
This paper proposes a belief-based framework for social norms in environments where individuals choose a single action. Relaxing the assumption that the appropriateness standard is common knowledge, the framework allows individuals to be…
We present a model elucidating wishful thinking, which comprehensively incorporates both the costs and benefits associated with biased beliefs. Our findings reveal that wishful thinking behavior can be characterized as equivalent to…
Whereas deterministic protocols are typically guaranteed to obtain particular goals of interest, probabilistic protocols typically provide only probabilistic guarantees. This paper initiates an investigation of the interdependence between…
There is substantial variability in the expectations that communication partners bring into interactions, creating the potential for misunderstandings. To directly probe these gaps and our ability to overcome them, we propose a…
The assumption of hazard rates being proportional in covariates is widely made in empirical research and extensive research has been done to develop tests of its validity. This paper does not contribute on this end. Instead, it gives new…
We revisit the role of instrumental value as a driver of adaptive behavior. In active inference, instrumental or extrinsic value is quantified by the information-theoretic surprisal of a set of observations measuring the extent to which…
Three statistical studies, all published between 2004 and 2008 but without referring to one another, assert a useful equivalence involving the hazard ratio, a parameter estimated for time to event data by the frequently used proportional…
We use the notion of a promise to define local trust between agents possessing autonomous decision-making. An agent is trustworthy if it is expected that it will keep a promise. This definition satisfies most commonplace meanings of trust.…
One way to make decisions under uncertainty is to select an optimal option from a possible range of options, by maximizing the expected utilities derived from a probability model. However, under severe uncertainty, identifying precise…
Human preferences in RLHF are typically modeled as a function of the human's reward function or corresponding optimal state-action values. In this work, we propose that human beliefs about the capabilities of the agent being trained also…
As large language models (LLMs) increasingly participate in tasks with ethical and societal stakes, a critical question arises: do they exhibit an emergent "moral mind" - a consistent structure of moral preferences guiding their decisions -…
Kinetic exchange models have been successful in explaining the shape of the income/wealth distribution in the economies. However, such models usually make some ad-hoc assumptions when it comes to determining the savings factor. Here, we…
The paper proposes a fresh look at the concept of goal and advances that motivational attitudes like desire, goal and intention are just facets of the broader notion of (acceptable) outcome. We propose to encode the preferences of an agent…
The intersection of causal inference and machine learning for decision-making is rapidly expanding, but the default decision criterion remains an \textit{average} of individual causal outcomes across a population. In practice, various…
We introduce the notion of fault tolerant mechanism design, which extends the standard game theoretic framework of mechanism design to allow for uncertainty about execution. Specifically, we define the problem of task allocation in which…
Estimating the causal effect of a treatment or health policy with observational data can be challenging due to an imbalance of and a lack of overlap between treated and control covariate distributions. In the presence of limited overlap,…
Agents can achieve effective interaction with previously unknown other agents by maintaining beliefs over a set of hypothetical behaviours, or types, that these agents may have. A current limitation in this method is that it does not…
Optimization is offered as an objective approach to resolving complex, real-world decisions involving uncertainty and conflicting interests. It drives business strategies as well as public policies and, increasingly, lies at the heart of…
We price European options in a class of models in which the volatility of the underlying risky asset depends on the short rate of interest. Our study results in an explicit pricing formula that depends on knowledge of a characteristic…