Neural representations of social and non-social uncertainty in human decision making

The social landscape is filled with an intricate web of species-specific desired objects and course of actions. Humans are highly social animals and, as they navigate this landscape, they need to produce adapted decision-making behaviour. Traditionally social and non-social neural mechanisms affecting choice have been investigated using different approaches. Recently, in an effort to unite these findings, two main theories have been proposed to explain how the brain might encode social and non-social motivational decision-making: the extended common currency and the social valuation specific schema (Ruff & Fehr 2014). One way to test these theories is to directly compare neural activity related to social and non-social decision outcomes within the same experimental setting. Here we address this issue by focusing on the neural substrates of social and non-social forms of uncertainty. Using functional magnetic resonance imaging (fMRI) we directly compared the neural representations of reward and risk prediction and errors (RePE and RiPE) in social and non- social situations using gambling games. We used a trust betting game to vary uncertainty along a social dimension (trustworthiness), and a card game (Preuschoff et al. 2006) to vary uncertainty along a non-social dimension (pure risk). The trust game was designed to maintain the same structure of the card game. In a first study, we exposed a divide between subcortical and cortical regions when comparing the way these regions process social and non-social forms of uncertainty during outcome anticipation. Activity in subcortical regions reflected social and non-social RePE, while activity in cortical regions correlated with social RePE and non-social RiPE. The second study focused on outcome delivery and integrated the concept of RiPE in non-social settings with that of fairness and monetary utility maximisation in social settings. In particular these results corroborate recent models of anterior insula function (Singer et al. 2009; Seth 2013), and expose a possible neural mechanism that weights fairness and uncertainty but not monetary utility. The third study focused on functionally defined regions of the early visual cortex (V1) showing how activity in these areas, traditionally considered only visual, might reflect motivational prediction errors in addition to known perceptual prediction mechanisms (den Ouden et al 2012). On the whole, while our results do not support unilaterally one or the other theory modeling the underlying neural dynamics of social and non-social forms of decision making, they provide a working framework where both general mechanisms might coexist.

The experience of teaching statistics to non-specialist students in Saudi universities

Undoubtedly, statistics has become one of the most important subjects in the modern world, where its applications are ubiquitous. The importance of statistics is not limited to statisticians, but also impacts upon non-statisticians who have to use statistics within their own disciplines. Several studies have indicated that most of the academic departments around the world have realized the importance of statistics to non-specialist students. Therefore, the number of students enrolled in statistics courses has vastly increased, coming from a variety of disciplines. Consequently, research within the scope of statistics education has been able to develop throughout the last few years. One important issue is how statistics is best taught to, and learned by, non-specialist students. This issue is controlled by several factors that affect the learning and teaching of statistics to non-specialist students, such as the use of technology, the role of the English language (especially for those whose first language is not English), the effectiveness of statistics teachers and their approach towards teaching statistics courses, students’ motivation to learn statistics and the relevance of statistics courses to the main subjects of non-specialist students. Several studies, focused on aspects of learning and teaching statistics, have been conducted in different countries around the world, particularly in Western countries. Conversely, the situation in Arab countries, especially in Saudi Arabia, is different; here, there is very little research in this scope, and what there is does not meet the needs of those countries towards the development of learning and teaching statistics to non-specialist students. This research was instituted in order to develop the field of statistics education. The purpose of this mixed methods study was to generate new insights into this subject by investigating how statistics courses are currently taught to non-specialist students in Saudi universities. Hence, this study will contribute towards filling the knowledge gap that exists in Saudi Arabia. This study used multiple data collection approaches, including questionnaire surveys from 1053 non-specialist students who had completed at least one statistics course in different colleges of the universities in Saudi Arabia. These surveys were followed up with qualitative data collected via semi-structured interviews with 16 teachers of statistics from colleges within all six universities where statistics is taught to non-specialist students in Saudi Arabia’s Eastern Region. The data from questionnaires included several types, so different techniques were used in analysis. Descriptive statistics were used to identify the demographic characteristics of the participants. The chi-square test was used to determine associations between variables. Based on the main issues that are raised from literature review, the questions (items scales) were grouped and five key groups of questions were obtained which are: 1) Effectiveness of Teachers; 2) English Language; 3) Relevance of Course; 4) Student Engagement; 5) Using Technology. Exploratory data analysis was used to explore these issues in more detail. Furthermore, with the existence of clustering in the data (students within departments within colleges, within universities), multilevel generalized linear models for dichotomous analysis have been used to clarify the effects of clustering at those levels. Factor analysis was conducted confirming the dimension reduction of variables (items scales). The data from teachers’ interviews were analysed on an individual basis. The responses were assigned to one of the eight themes that emerged from within the data: 1) the lack of students’ motivation to learn statistics; 2) students' participation; 3) students’ assessment; 4) the effective use of technology; 5) the level of previous mathematical and statistical skills of non-specialist students; 6) the English language ability of non-specialist students; 7) the need for extra time for teaching and learning statistics; and 8) the role of administrators. All the data from students and teachers indicated that the situation of learning and teaching statistics to non-specialist students in Saudi universities needs to be improved in order to meet the needs of those students. The findings of this study suggested a weakness in the use of statistical software applications in these courses. This study showed that there is lack of application of technology such as statistical software programs in these courses, which would allow non-specialist students to consolidate their knowledge. The results also indicated that English language is considered one of the main challenges in learning and teaching statistics, particularly in institutions where English is not used as the main language. Moreover, the weakness of mathematical skills of students is considered another major challenge. Additionally, the results indicated that there was a need to tailor statistics courses to the needs of non-specialist students based on their main subjects. The findings indicate that statistics teachers need to choose appropriate methods when teaching statistics courses.

Forecasting exchange rates in the presence of instabilities

Many exchange rate papers articulate the view that instabilities constitute a major impediment to exchange rate predictability. In this thesis we implement Bayesian and other techniques to account for such instabilities, and examine some of the main obstacles to exchange rate models' predictive ability. We first consider in Chapter 2 a time-varying parameter model in which fluctuations in exchange rates are related to short-term nominal interest rates ensuing from monetary policy rules, such as Taylor rules. Unlike the existing exchange rate studies, the parameters of our Taylor rules are allowed to change over time, in light of the widespread evidence of shifts in fundamentals - for example in the aftermath of the Global Financial Crisis. Focusing on quarterly data frequency from the crisis, we detect forecast improvements upon a random walk (RW) benchmark for at least half, and for as many as seven out of 10, of the currencies considered. Results are stronger when we allow the time-varying parameters of the Taylor rules to differ between countries. In Chapter 3 we look closely at the role of time-variation in parameters and other sources of uncertainty in hindering exchange rate models' predictive power. We apply a Bayesian setup that incorporates the notion that the relevant set of exchange rate determinants and their corresponding coefficients, change over time. Using statistical and economic measures of performance, we first find that predictive models which allow for sudden, rather than smooth, changes in the coefficients yield significant forecast improvements and economic gains at horizons beyond 1-month. At shorter horizons, however, our methods fail to forecast better than the RW. And we identify uncertainty in coefficients' estimation and uncertainty about the precise degree of coefficients variability to incorporate in the models, as the main factors obstructing predictive ability. Chapter 4 focus on the problem of the time-varying predictive ability of economic fundamentals for exchange rates. It uses bootstrap-based methods to uncover the time-specific conditioning information for predicting fluctuations in exchange rates. Employing several metrics for statistical and economic evaluation of forecasting performance, we find that our approach based on pre-selecting and validating fundamentals across bootstrap replications generates more accurate forecasts than the RW. The approach, known as bumping, robustly reveals parsimonious models with out-of-sample predictive power at 1-month horizon; and outperforms alternative methods, including Bayesian, bagging, and standard forecast combinations. Chapter 5 exploits the predictive content of daily commodity prices for monthly commodity-currency exchange rates. It builds on the idea that the effect of daily commodity price fluctuations on commodity currencies is short-lived, and therefore harder to pin down at low frequencies. Using MIxed DAta Sampling (MIDAS) models, and Bayesian estimation methods to account for time-variation in predictive ability, the chapter demonstrates the usefulness of suitably exploiting such short-lived effects in improving exchange rate forecasts. It further shows that the usual low-frequency predictors, such as money supplies and interest rates differentials, typically receive little support from the data at monthly frequency, whereas MIDAS models featuring daily commodity prices are highly likely. The chapter also introduces the random walk Metropolis-Hastings technique as a new tool to estimate MIDAS regressions.