Efficient methods for empirical tests of behavioral economics theories in laboratory and field experiments

In the quest for a descriptive theory of decision-making, the rational actor model in economics imposes rather unrealistic expectations and abilities on human decision makers. The further we move from idealized scenarios, such as perfectly competitive markets, and ambitiously extend the reach of the theory to describe everyday decision making situations, the less sense these assumptions make. Behavioural economics has instead proposed models based on assumptions that are more psychologically realistic, with the aim of gaining more precision and descriptive power. Increased psychological realism, however, comes at the cost of a greater number of parameters and model complexity. Now there are a plethora of models, based on different assumptions, applicable in differing contextual settings, and selecting the right model to use tends to be an ad-hoc process. In this thesis, we develop optimal experimental design methods and evaluate different behavioral theories against evidence from lab and field experiments.

We look at evidence from controlled laboratory experiments. Subjects are presented with choices between monetary gambles or lotteries. Different decision-making theories evaluate the choices differently and would make distinct predictions about the subjects' choices. Theories whose predictions are inconsistent with the actual choices can be systematically eliminated. Behavioural theories can have multiple parameters requiring complex experimental designs with a very large number of possible choice tests. This imposes computational and economic constraints on using classical experimental design methods. We develop a methodology of adaptive tests: Bayesian Rapid Optimal Adaptive Designs (BROAD) that sequentially chooses the "most informative" test at each stage, and based on the response updates its posterior beliefs over the theories, which informs the next most informative test to run. BROAD utilizes the Equivalent Class Edge Cutting (EC²) criteria to select tests. We prove that the EC² criteria is adaptively submodular, which allows us to prove theoretical guarantees against the Bayes-optimal testing sequence even in the presence of noisy responses. In simulated ground-truth experiments, we find that the EC² criteria recovers the true hypotheses with significantly fewer tests than more widely used criteria such as Information Gain and Generalized Binary Search. We show, theoretically as well as experimentally, that surprisingly these popular criteria can perform poorly in the presence of noise, or subject errors. Furthermore, we use the adaptive submodular property of EC² to implement an accelerated greedy version of BROAD which leads to orders of magnitude speedup over other methods.

We use BROAD to perform two experiments. First, we compare the main classes of theories for decision-making under risk, namely: expected value, prospect theory, constant relative risk aversion (CRRA) and moments models. Subjects are given an initial endowment, and sequentially presented choices between two lotteries, with the possibility of losses. The lotteries are selected using BROAD, and 57 subjects from Caltech and UCLA are incentivized by randomly realizing one of the lotteries chosen. Aggregate posterior probabilities over the theories show limited evidence in favour of CRRA and moments' models. Classifying the subjects into types showed that most subjects are described by prospect theory, followed by expected value. Adaptive experimental design raises the possibility that subjects could engage in strategic manipulation, i.e. subjects could mask their true preferences and choose differently in order to obtain more favourable tests in later rounds thereby increasing their payoffs. We pay close attention to this problem; strategic manipulation is ruled out since it is infeasible in practice, and also since we do not find any signatures of it in our data.

In the second experiment, we compare the main theories of time preference: exponential discounting, hyperbolic discounting, "present bias" models: quasi-hyperbolic (α, β) discounting and fixed cost discounting, and generalized-hyperbolic discounting. 40 subjects from UCLA were given choices between 2 options: a smaller but more immediate payoff versus a larger but later payoff. We found very limited evidence for present bias models and hyperbolic discounting, and most subjects were classified as generalized hyperbolic discounting types, followed by exponential discounting.

In these models the passage of time is linear. We instead consider a psychological model where the perception of time is subjective. We prove that when the biological (subjective) time is positively dependent, it gives rise to hyperbolic discounting and temporal choice inconsistency.

We also test the predictions of behavioral theories in the "wild". We pay attention to prospect theory, which emerged as the dominant theory in our lab experiments of risky choice. Loss aversion and reference dependence predicts that consumers will behave in a uniquely distinct way than the standard rational model predicts. Specifically, loss aversion predicts that when an item is being offered at a discount, the demand for it will be greater than that explained by its price elasticity. Even more importantly, when the item is no longer discounted, demand for its close substitute would increase excessively. We tested this prediction using a discrete choice model with loss-averse utility function on data from a large eCommerce retailer. Not only did we identify loss aversion, but we also found that the effect decreased with consumers' experience. We outline the policy implications that consumer loss aversion entails, and strategies for competitive pricing.

In future work, BROAD can be widely applicable for testing different behavioural models, e.g. in social preference and game theory, and in different contextual settings. Additional measurements beyond choice data, including biological measurements such as skin conductance, can be used to more rapidly eliminate hypothesis and speed up model comparison. Discrete choice models also provide a framework for testing behavioural models with field data, and encourage combined lab-field experiments.

Branes and supersymmetric quantum field theories

Since the discovery of D-branes as non-perturbative, dynamic objects in string theory, various configurations of branes in type IIA/B string theory and M-theory have been considered to study their low-energy dynamics described by supersymmetric quantum field theories.

One example of such a construction is based on the description of Seiberg-Witten curves of four-dimensional N = 2 supersymmetric gauge theories as branes in type IIA string theory and M-theory. This enables us to study the gauge theories in strongly-coupled regimes. Spectral networks are another tool for utilizing branes to study non-perturbative regimes of two- and four-dimensional supersymmetric theories. Using spectral networks of a Seiberg-Witten theory we can find its BPS spectrum, which is protected from quantum corrections by supersymmetry, and also the BPS spectrum of a related two-dimensional N = (2,2) theory whose (twisted) superpotential is determined by the Seiberg-Witten curve. When we don’t know the perturbative description of such a theory, its spectrum obtained via spectral networks is a useful piece of information. In this thesis we illustrate these ideas with examples of the use of Seiberg-Witten curves and spectral networks to understand various two- and four-dimensional supersymmetric theories.

First, we examine how the geometry of a Seiberg-Witten curve serves as a useful tool for identifying various limits of the parameters of the Seiberg-Witten theory, including Argyres-Seiberg duality and Argyres-Douglas fixed points. Next, we consider the low-energy limit of a two-dimensional N = (2, 2) supersymmetric theory from an M-theory brane configuration whose (twisted) superpotential is determined by the geometry of the branes. We show that, when the two-dimensional theory flows to its infra-red fixed point, particular cases realize Kazama-Suzuki coset models. We also study the BPS spectrum of an Argyres-Douglas type superconformal field theory on the Coulomb branch by using its spectral networks. We provide strong evidence of the equivalence of superconformal field theories from different string-theoretic constructions by comparing their BPS spectra.

I. Spectroscopic evidence for slow vibrational relaxation in excited electronic states of diatomics in rare gas solids. II. Static crystal field effects in the electronic spectra of isotopically mixed benzene crystals

Part I

Studies of vibrational relaxation in excited electronic states of simple diatomic molecules trapped in solid rare-gas matrices at low temperatures are reported. The relaxation is investigated by monitoring the emission intensity from vibrational levels of the excited electronic state to vibrational levels of the ground electronic state. The emission was in all cases excited by bombardment of the doped rare-gas solid with X-rays.

The diatomics studied and the band systems seen are: N₂, Vegard-Kaplan and Second Positive systems; O₂, Herzberg system; OH and OD, A ²Σ⁺ - X²II_i system. The latter has been investigated only in solid Ne, where both emission and absorption spectra were recorded; observed fine structure has been partly interpreted in terms of slightly perturbed rotational motion in the solid. For N₂, OH, and OD emission occurred from v' > 0, establishing a vibrational relaxation time in the excited electronic state of the order, of longer than, the electronic radiative lifetime. The relative emission intensity and decay times for different v' progressions in the Vegard-Kaplan system are found to depend on the rare-gas host and the N₂ concentration, but are independent of temperature in the range 1.7°K to 30°K.

Part II

Static crystal field effects on the absorption, fluorescence, and phosphorescence spectra of isotopically mixed benzene crystals were investigated. Evidence is presented which demonstrate that in the crystal the ground, lowest excited singlet, and lowest triplet states of the guest deviate from hexagonal symmetry. The deviation appears largest in the lowest triplet state and may be due to an intrinsic instability of the ³B_1u state. High resolution absorption and phospho- rescence spectra are reported and analyzed in terms of site-splitting of degenerate vibrations and orientational effects. The guest phosphorescence lifetime for various benzene isotopes in C₆D₆ and sym-C₆H₃D₃ hosts is presented and discussed.

Transcription factor occupancy in differentiating skeletal muscle

With recent advances in high-throughput sequencing, mapping of genome-wide transcription factor occupancy has become feasible. To advance the understanding of skeletal muscle differentiation specifically and transcriptional regulation in general, I determined the genome-wide occupancy map for myogenin in differentiating C2C12 myocyte cells. I then analyzed the myogenin map for underlying sequence content and the association between occupied elements and expression trajectories of adjacent genes. Having determined that myogenin primarily associates with expressed genes, I performed a similar analysis on occupancy maps of other transcription factors active during skeletal muscle differentiation, including an extensive analysis of co-occupancy. This analysis provided strong motif evidence for protein-protein interactions as the primary driving force in the formation of Myogenin / Mef2 and MyoD / AP-1 complexes at jointly-occupied sites. Finally, factor occupancy analysis was extended to include bHLH transcription factors in tissues other than skeletal muscle. The cross-tissue analysis led to the emergence of a motif structure used by bHLH TFs to encode either tissue-specific or "general" (public) access in a variety of lineages.

Geometric integration applied to moving mesh methods and degenerate Lagrangians

Moving mesh methods (also called r-adaptive methods) are space-adaptive strategies used for the numerical simulation of time-dependent partial differential equations. These methods keep the total number of mesh points fixed during the simulation, but redistribute them over time to follow the areas where a higher mesh point density is required. There are a very limited number of moving mesh methods designed for solving field-theoretic partial differential equations, and the numerical analysis of the resulting schemes is challenging. In this thesis we present two ways to construct r-adaptive variational and multisymplectic integrators for (1+1)-dimensional Lagrangian field theories. The first method uses a variational discretization of the physical equations and the mesh equations are then coupled in a way typical of the existing r-adaptive schemes. The second method treats the mesh points as pseudo-particles and incorporates their dynamics directly into the variational principle. A user-specified adaptation strategy is then enforced through Lagrange multipliers as a constraint on the dynamics of both the physical field and the mesh points. We discuss the advantages and limitations of our methods. The proposed methods are readily applicable to (weakly) non-degenerate field theories---numerical results for the Sine-Gordon equation are presented.

In an attempt to extend our approach to degenerate field theories, in the last part of this thesis we construct higher-order variational integrators for a class of degenerate systems described by Lagrangians that are linear in velocities. We analyze the geometry underlying such systems and develop the appropriate theory for variational integration. Our main observation is that the evolution takes place on the primary constraint and the 'Hamiltonian' equations of motion can be formulated as an index 1 differential-algebraic system. We then proceed to construct variational Runge-Kutta methods and analyze their properties. The general properties of Runge-Kutta methods depend on the 'velocity' part of the Lagrangian. If the 'velocity' part is also linear in the position coordinate, then we show that non-partitioned variational Runge-Kutta methods are equivalent to integration of the corresponding first-order Euler-Lagrange equations, which have the form of a Poisson system with a constant structure matrix, and the classical properties of the Runge-Kutta method are retained. If the 'velocity' part is nonlinear in the position coordinate, we observe a reduction of the order of convergence, which is typical of numerical integration of DAEs. We also apply our methods to several models and present the results of our numerical experiments.

Phase conjugation via four-wave mixing in a resonant medium

This thesis describes the theoretical solution and experimental verification of phase conjugation via nondegenerate four-wave mixing in resonant media. The theoretical work models the resonant medium as a two-level atomic system with the lower state of the system being the ground state of the atom. Working initially with an ensemble of stationary atoms, the density matrix equations are solved by third-order perturbation theory in the presence of the four applied electro-magnetic fields which are assumed to be nearly resonant with the atomic transition. Two of the applied fields are assumed to be non-depleted counterpropagating pump waves while the third wave is an incident signal wave. The fourth wave is the phase conjugate wave which is generated by the interaction of the three previous waves with the nonlinear medium. The solution of the density matrix equations gives the local polarization of the atom. The polarization is used in Maxwell's equations as a source term to solve for the propagation and generation of the signal wave and phase conjugate wave through the nonlinear medium. Studying the dependence of the phase conjugate signal on the various parameters such as frequency, we show how an ultrahigh-Q isotropically sensitive optical filter can be constructed using the phase conjugation process.

In many cases the pump waves may saturate the resonant medium so we also present another solution to the density matrix equations which is correct to all orders in the amplitude of the pump waves since the third-order solution is correct only to first-order in each of the field amplitudes. In the saturated regime, we predict several new phenomena associated with degenerate four-wave mixing and also describe the ac Stark effect and how it modifies the frequency response of the filtering process. We also show how a narrow bandwidth optical filter with an efficiency greater than unity can be constructed.

In many atomic systems the atoms are moving at significant velocities such that the Doppler linewidth of the system is larger than the homogeneous linewidth. The latter linewidth dominates the response of the ensemble of stationary atoms. To better understand this case the density matrix equations are solved to third-order by perturbation theory for an atom of velocity v. The solution for the polarization is then integrated over the velocity distribution of the macroscopic system which is assumed to be a gaussian distribution of velocities since that is an excellent model of many real systems. Using the Doppler broadened system, we explain how a tunable optical filter can be constructed whose bandwidth is limited by the homogeneous linewidth of the atom while the tuning range of the filter extends over the entire Doppler profile.

Since it is a resonant system, sodium vapor is used as the nonlinear medium in our experiments. The relevant properties of sodium are discussed in great detail. In particular, the wavefunctions of the 3S and 3P states are analyzed and a discussion of how the 3S-3P transition models a two-level system is given.

Using sodium as the nonlinear medium we demonstrate an ultrahigh-Q optical filter using phase conjugation via nondegenerate four-wave mixing as the filtering process. The filter has a FWHM bandwidth of 41 MHz and a maximum efficiency of 4 x 10^-3. However, our theoretical work and other experimental work with sodium suggest that an efficient filter with both gain and a narrower bandwidth should be quite feasible.

Dilution refrigeration and a calorimetric measurement of the quadruple coupling constant in rhenium metal

A dilution refrigerator has been constructed capable of producing steady state temperatures less than .075°K. The first part of this work is concerned with the design and construction of this machine. Enough theory is presented to allow one to understand the operation and critical design factors of a dilution refrigerator. The performance of our refrigerator is compared with the operating characteristics of three other dilution refrigerators appearing in the present literature.

The dilution refrigerator constructed was used to measure the nuclear contribution to the low temperature specific heat of a pure, single-crystalline sample of rhenium metal. Measurements were made in magnetic fields from 0 to 12.5 kOe for the temperature range .13°K - .52°K. The second part of this work discusses the results of these experiments. The expected nuclear contribution is not found when the sample is in the superconducting state. This is believed to be due to the long spin-lattice relaxation times in superconductors. In the normal state, for the temperature range studied, the nuclear contribution is given by A/T² where A = .061 ± .002 millijoules-K/mole. The value of A is found to increase to A = .077 ± .004 millijoules-K/mole when the sample is located in a magnetic field of 12.5 kOe.

From the measured value of A the splitting of the energy levels of the nuclear spin system due to the interaction of the internal crystalline electric field gradients with the nuclear quadrupole moments is calculated. A comparison is made between the predicted and measured magnetic dependence of the specific heat. Finally, predictions are made of future nuclear magnetic resonance experiments which may be performed to check the results obtained by calorimetery here and further, to investigate existing theories concerning the sources of electric field gradients in metals.