Essays in Behavioral Decision Theory

This thesis studies decision making under uncertainty and how economic agents respond to information. The classic model of subjective expected utility and Bayesian updating is often at odds with empirical and experimental results; people exhibit systematic biases in information processing and often exhibit aversion to ambiguity. The aim of this work is to develop simple models that capture observed biases and study their economic implications.

In the first chapter I present an axiomatic model of cognitive dissonance, in which an agent's response to information explicitly depends upon past actions. I introduce novel behavioral axioms and derive a representation in which beliefs are directionally updated. The agent twists the information and overweights states in which his past actions provide a higher payoff. I then characterize two special cases of the representation. In the first case, the agent distorts the likelihood ratio of two states by a function of the utility values of the previous action in those states. In the second case, the agent's posterior beliefs are a convex combination of the Bayesian belief and the one which maximizes the conditional value of the previous action. Within the second case a unique parameter captures the agent's sensitivity to dissonance, and I characterize a way to compare sensitivity to dissonance between individuals. Lastly, I develop several simple applications and show that cognitive dissonance contributes to the equity premium and price volatility, asymmetric reaction to news, and belief polarization.

The second chapter characterizes a decision maker with sticky beliefs. That is, a decision maker who does not update enough in response to information, where enough means as a Bayesian decision maker would. This chapter provides axiomatic foundations for sticky beliefs by weakening the standard axioms of dynamic consistency and consequentialism. I derive a representation in which updated beliefs are a convex combination of the prior and the Bayesian posterior. A unique parameter captures the weight on the prior and is interpreted as the agent's measure of belief stickiness or conservatism bias. This parameter is endogenously identified from preferences and is easily elicited from experimental data.

The third chapter deals with updating in the face of ambiguity, using the framework of Gilboa and Schmeidler. There is no consensus on the correct way way to update a set of priors. Current methods either do not allow a decision maker to make an inference about her priors or require an extreme level of inference. In this chapter I propose and axiomatize a general model of updating a set of priors. A decision maker who updates her beliefs in accordance with the model can be thought of as one that chooses a threshold that is used to determine whether a prior is plausible, given some observation. She retains the plausible priors and applies Bayes' rule. This model includes generalized Bayesian updating and maximum likelihood updating as special cases.

Connectivity and Function of the Primate Insula

The insula is a mammalian cortical structure that has been implicated in a wide range of low- and high-level functions governing one’s sensory, emotional, and cognitive experiences. One particular role of this region is considered to be processing of olfactory stimuli. The ability to detect and evaluate odors has significant effects on an organism’s eating behavior and survival and, in case of humans, on complex decision making. Despite such importance of this function, the mechanism in which olfactory information is processed in the insula has not been thoroughly studied. Moreover, due to the structure’s close spatial relationship with the neighboring claustrum, it is not entirely clear whether the connectivity and olfactory functions attributed to the insula are truly those of the insula, rather than of the claustrum. My graduate work, consisting of two studies, seeks to help fill these gaps. In the first, the structural connectivity patterns of the insula and the claustrum in a non-human primate brain is assayed using an ultra-high-quality diffusion magnetic resonance image, and the results suggest dissociation of connectivity — and hence function — between the two structures. In the second study, a functional neuroimaging experiment investigates the insular activity during odor evaluation tasks in humans, and uncovers a potential spatial organization within the anterior portion of the insula for processing different aspects of odor characteristics.

Sobre a motivação da sentença no processo civil: Estado constitucional democrático de direito, discurso justificativo e legitimação do exercício da jurisdição

O presente trabalho, plasmado em metodologia jurídica, reflete criticamente sobre o problema da motivação da sentença civil como elemento de organização e de funcionamento do Estado Constitucional Democrático de Direito. A motivação é condição essencial de jurisdicionalidade, no sentido de que sem motivação não há exercício legítimo da função jurisdicional. O trabalho faz uma abordagem da natureza da motivação como discurso justificativo, jurídico e racional, da validade dos critérios de escolha ou de valoração empregados pelo juiz em sua decisão. O raciocínio do juiz é apresentado sob dupla feição: raciocínio decisório interno (contexto de descoberta ou deliberação) e raciocínio justificativo externo (contexto de justificação ou de validação). O conjunto das funções técnico-instrumental (endoprocessual) e político-garantística (extraprocessual) é objeto de investigação. A motivação, nos planos teórico e prático, exerce também a função de garantia do garantismo processual. A tese da inexistência jurídica da sentença tem três eixos teóricos: omissão total da motivação gráfica; falta de motivação ideológica, equiparada à hipótese de ausência de motivação gráfica; incompatibilidade lógica radical entre as premissas ou entre as premissas e a conclusão final, que também equivale à ausência total de motivação. O trabalho retrata um modelo de injustiça atemporal vivificado pelo juiz Crono, oposto à motivação como inestimável fator de legitimação argumentativa da jurisdição. A obrigatoriedade de motivação pública é o traço característico da jurisdição de nossa contemporaneidade e representa a maior conquista civilizatória do processo équo e justo.

Motor control is decision-making.

Motor behavior may be viewed as a problem of maximizing the utility of movement outcome in the face of sensory, motor and task uncertainty. Viewed in this way, and allowing for the availability of prior knowledge in the form of a probability distribution over possible states of the world, the choice of a movement plan and strategy for motor control becomes an application of statistical decision theory. This point of view has proven successful in recent years in accounting for movement under risk, inferring the loss function used in motor tasks, and explaining motor behavior in a wide variety of circumstances.

Dynamical structure function identifiability conditions enabling signal structure reconstruction

Networks of controlled dynamical systems exhibit a variety of interconnection patterns that could be interpreted as the structure of the system. One such interpretation of system structure is a system's signal structure, characterized as the open-loop causal dependencies among manifest variables and represented by its dynamical structure function. Although this notion of structure is among the weakest available, previous work has shown that if no a priori structural information is known about the system, not even the Boolean structure of the dynamical structure function is identifiable. Consequently, one method previously suggested for obtaining the necessary a priori structural information is to leverage knowledge about target specificity of the controlled inputs. This work extends these results to demonstrate precisely the a priori structural information that is both necessary and sufficient to reconstruct the network from input-output data. This extension is important because it significantly broadens the applicability of the identifiability conditions, enabling the design of network reconstruction experiments that were previously impossible due to practical constraints on the types of actuation mechanisms available to the engineer or scientist. The work is motivated by the proteomics problem of reconstructing the Per-Arnt-Sim Kinase pathway used in the metabolism of sugars. © 2012 IEEE.

Serotonin selectively modulates reward value in human decision-making.

Establishing a function for the neuromodulator serotonin in human decision-making has proved remarkably difficult because if its complex role in reward and punishment processing. In a novel choice task where actions led concurrently and independently to the stochastic delivery of both money and pain, we studied the impact of decreased brain serotonin induced by acute dietary tryptophan depletion. Depletion selectively impaired both behavioral and neural representations of reward outcome value, and hence the effective exchange rate by which rewards and punishments were compared. This effect was computationally and anatomically distinct from a separate effect on increasing outcome-independent choice perseveration. Our results provide evidence for a surprising role for serotonin in reward processing, while illustrating its complex and multifarious effects.

Motor control is decision-making

© 2012 Elsevier Ltd. Motor behavior may be viewed as a problem of maximizing the utility of movement outcome in the face of sensory, motor and task uncertainty. Viewed in this way, and allowing for the availability of prior knowledge in the form of a probability distribution over possible states of the world, the choice of a movement plan and strategy for motor control becomes an application of statistical decision theory. This point of view has proven successful in recent years in accounting for movement under risk, inferring the loss function used in motor tasks, and explaining motor behavior in a wide variety of circumstances.

Compact Reconfigurable Binary-Decision-Diagram Logic Circuit on a GaAs Nanowire Network

We describe a reconfigurable binary-decision-diagram logic circuit based on Shannon's expansion of Boolean logic function and its graphical representation on a semiconductor nanowire network. The circuit is reconfigured by using programmable switches that electrically connect and disconnect a small number of branches. This circuit has a compact structure with a small number of devices compared with the conventional look-up table architecture. A variable Boolean logic circuit was fabricated on an etched GaAs nanowire network having hexagonal topology with Schottky wrap gates and SiN-based programmable switches, and its correct logic operation together with dynamic reconfiguration was demonstrated.

Decision tree classification of land cover from remotely sensed data

Decision tree classification algorithms have significant potential for land cover mapping problems and have not been tested in detail by the remote sensing community relative to more conventional pattern recognition techniques such as maximum likelihood classification. In this paper, we present several types of decision tree classification algorithms arid evaluate them on three different remote sensing data sets. The decision tree classification algorithms tested include an univariate decision tree, a multivariate decision tree, and a hybrid decision tree capable of including several different types of classification algorithms within a single decision tree structure. Classification accuracies produced by each of these decision tree algorithms are compared with both maximum likelihood and linear discriminant function classifiers. Results from this analysis show that the decision tree algorithms consistently outperform the maximum likelihood and linear discriminant function classifiers in regard to classf — cation accuracy. In particular, the hybrid tree consistently produced the highest classification accuracies for the data sets tested. More generally, the results from this work show that decision trees have several advantages for remote sensing applications by virtue of their relatively simple, explicit, and intuitive classification structure. Further, decision tree algorithms are strictly nonparametric and, therefore, make no assumptions regarding the distribution of input data, and are flexible and robust with respect to nonlinear and noisy relations among input features and class labels.

Confirmation of Data Mining Based Predictions of Protein Function

King, R. D. and Wise, P. H. and Clare, A. (2004) Confirmation of Data Mining Based Predictions of Protein Function. Bioinformatics 20(7), 1110-1118

Development of a decision aid to inform patients' and families' renal replacement therapy selection decisions.

BACKGROUND: Few educational resources have been developed to inform patients' renal replacement therapy (RRT) selection decisions. Patients progressing toward end stage renal disease (ESRD) must decide among multiple treatment options with varying characteristics. Complex information about treatments must be adequately conveyed to patients with different educational backgrounds and informational needs. Decisions about treatment options also require family input, as families often participate in patients' treatment and support patients' decisions. We describe the development, design, and preliminary evaluation of an informational, evidence-based, and patient-and family-centered decision aid for patients with ESRD and varying levels of health literacy, health numeracy, and cognitive function. METHODS: We designed a decision aid comprising a complementary video and informational handbook. We based our development process on data previously obtained from qualitative focus groups and systematic literature reviews. We simultaneously developed the video and handbook in "stages." For the video, stages included (1) directed interviews with culturally appropriate patients and families and preliminary script development, (2) video production, and (3) screening the video with patients and their families. For the handbook, stages comprised (1) preliminary content design, (2) a mixed-methods pilot study among diverse patients to assess comprehension of handbook material, and (3) screening the handbook with patients and their families. RESULTS: The video and handbook both addressed potential benefits and trade-offs of treatment selections. The 50-minute video consisted of demographically diverse patients and their families describing their positive and negative experiences with selecting a treatment option. The video also incorporated health professionals' testimonials regarding various considerations that might influence patients' and families' treatment selections. The handbook was comprised of written words, pictures of patients and health care providers, and diagrams describing the findings and quality of scientific studies comparing treatments. The handbook text was written at a 4th to 6th grade reading level. Pilot study results demonstrated that a majority of patients could understand information presented in the handbook. Patient and families screening the nearly completed video and handbook reviewed the materials favorably. CONCLUSIONS: This rigorously designed decision aid may help patients and families make informed decisions about their treatment options for RRT that are well aligned with their values.

Rapid tryptophan depletion improves decision-making cognition in healthy humans without affecting reversal learning or set shifting

Rapid tryptophan (Trp) depletion (RTD) has been reported to cause deterioration in the quality of decision making and impaired reversal learning, while leaving attentional set shifting relatively unimpaired. These findings have been attributed to a more powerful neuromodulatory effect of reduced 5-HT on ventral prefrontal cortex (PFC) than on dorsolateral PFC. In view of the limited number of reports, the aim of this study was to independently replicate these findings using the same test paradigms. Healthy human subjects without a personal or family history of affective disorder were assessed using a computerized decision making/gambling task and the CANTAB ID/ED attentional set-shifting task under Trp-depleted (n=17; nine males and eight females) or control (n=15; seven males and eight females) conditions, in a double-blind, randomized, parallel-group design. There was no significant effect of RTD on set shifting, reversal learning, risk taking, impulsivity, or subjective mood. However, RTD significantly altered decision making such that depleted subjects chose the more likely of two possible outcomes significantly more often than controls. This is in direct contrast to the previous report that subjects chose the more likely outcome significantly less often following RTD. In the terminology of that report, our result may be interpreted as improvement in the quality of decision making following RTD. This contrast between studies highlights the variability in the cognitive effects of RTD between apparently similar groups of healthy subjects, and suggests the need for future RTD studies to control for a range of personality, family history, and genetic factors that may be associated with 5-HT function.

RIP kinases: key decision makers in cell death and innate immunity

Innate immunity represents the first line of defence against invading pathogens. It consists of an initial inflammatory response that recruits white blood cells to the site of infection in an effort to destroy and eliminate the pathogen. Some pathogens replicate within host cells, and cell death by apoptosis is an important effector mechanism to remove the replication niche for such microbes. However, some microbes have evolved evasive strategies to block apoptosis, and in these cases host cells may employ further countermeasures, including an inflammatory form of cell death know as necroptosis. This review aims to highlight the importance of the RIP kinase family in controlling these various defence strategies. RIP1 is initially discussed as a key component of death receptor signalling and in the context of dictating whether a cell triggers a pathway of pro-inflammatory gene expression or cell death by apoptosis. The molecular and functional interplay of RIP1 and RIP3 is described, especially with respect to mediating necroptosis and as key mediators of inflammation. The function of RIP2, with particular emphasis on its role in NOD signalling, is also explored. Special attention is given to emphasizing the physiological and pathophysiological contexts for these various functions of RIP kinases.

The function and future of the LOICS basins approach in promoting integrated coastal zone & watershed management with an emphasis on developing countries

Dissertação de Mestrado, Gestão da Água e da Costa, Faculdade de Ciências e Tecnologia, Universidade do Algarve, 2010

A decision-support system based on particle swarm optimization for multiperiod hedging in electricity markets

This paper proposes a particle swarm optimization (PSO) approach to support electricity producers for multiperiod optimal contract allocation. The producer risk preference is stated by a utility function (U) expressing the tradeoff between the expectation and variance of the return. Variance estimation and expected return are based on a forecasted scenario interval determined by a price range forecasting model developed by the authors. A certain confidence level is associated to each forecasted scenario interval. The proposed model makes use of contracts with physical (spot and forward) and financial (options) settlement. PSO performance was evaluated by comparing it with a genetic algorithm-based approach. This model can be used by producers in deregulated electricity markets but can easily be adapted to load serving entities and retailers. Moreover, it can easily be adapted to the use of other type of contracts.