Bridging Jeffrey's Rule, AGM Revision and Dempster Conditioning in the Theory of Evidence

Belief revision characterizes the process of revising an agent’s beliefs when receiving new evidence. In the field of artificial intelligence, revision strategies have been extensively studied in the context of logic-based formalisms and probability kinematics. However, so far there is not much literature on this topic in evidence theory. In contrast, combination rules proposed so far in the theory of evidence, especially Dempster rule, are symmetric. They rely on a basic assumption, that is, pieces of evidence being combined are considered to be on a par, i.e. play the same role. When one source of evidence is less reliable than another, it is possible to discount it and then a symmetric combination operation
is still used. In the case of revision, the idea is to let prior knowledge of an agent be altered by some input information. The change problem is thus intrinsically asymmetric. Assuming the input information is reliable, it should be retained whilst the prior information should be changed minimally to that effect. To deal with this issue, this paper defines the notion of revision for the theory of evidence in such a way as to bring together probabilistic and logical views. Several revision rules previously proposed are reviewed and we advocate one of them as better corresponding to the idea of revision. It is extended to cope with inconsistency between prior and input information. It reduces to Dempster
rule of combination, just like revision in the sense of Alchourron, Gardenfors, and Makinson (AGM) reduces to expansion, when the input is strongly consistent with the prior belief function. Properties of this revision rule are also investigated and it is shown to generalize Jeffrey’s rule of updating, Dempster rule of conditioning and a form of AGM revision.

Dirty Hands and the Complicity of the Democratic Public

The alleged problem of the dirty hands of politicians has been much discussed since Michael Walzer’s original piece (Walzer 1974). The discussion has concerned the precise nature of the problem or sought to dissolve the apparent paradox. However there has been little discussion of the putative complicity, and thus also dirtying of hands, of a democratic public that authorizes politicians to act in its name. This article outlines the sense in which politicians do get dirty hands and the degree to which a democratic public may also get dirty hands. It separates the questions of secrecy, authorisation, and wrongfulness in order to spell out the extent of public complicity. Finally it addresses the ways in which those who do and those who do not acknowledge the problem of dirty hands erroneously discount or deny the problem of complicity by an appeal to the nature of democracy, a putatively essential need for political openness or to the scope of ideal theory.

Good things come to those who wait:Time discounting differences between adult offenders and nonoffenders

Criminal behavior has been explained by the idea that offenders have a lack of self-control. Yet, Wilson and Daly reported that juvenile offenders exhibit time-discounting tendencies similar to those of nonoffending juveniles. As no previous study has compared time-discounting behavior of adult offenders with nonoffenders, we raise the question, do adult offenders exhibit shorter time horizons or the tendency to discount future rewards? To answer this question, 89 offenders (ex-prisoners and prisoners) and 106 nonoffenders completed a time-discounting measure containing 27 different monetary choices. Our results show that, counter to findings with juvenile offenders, adult offenders (ex-prisoners) exhibit significantly shorter time horizons and discount more than nonoffenders as delayed payoffs increase to medium and large rewards. Furthermore, both offenders and nonoffenders are less likely to discount as the reward of future gains increases to medium and large.

Energy efficiency investments in the home: Swiss homeowners and expectations about future energy prices

Using conjoint choice experiments, we surveyed 473 Swiss homeowners about their preferences for energy efficiency home renovations.We find that homeowners are responsive to the upfront costs of the renovation projects, governmentoffered rebates, savings in energy expenses, time horizon over which such savings would be realized, and thermal comfort improvement. The implicit discount rate is low, ranging from 1.5 to 3%, depending on model specification. This is consistent with Hassett and Metcalf (1993) and Metcalf and Rosenthal (1995), and with the fact that our scenarios contain no uncertainty. Respondents who feel completely uncertain about future energy prices are more likely to select the status quo (no renovations) in any given choice task and weight the costs of the investments more heavily than the financial gains (subsidies and savings on the energy bills). Renovations are more likely when respondents believe that climate change considerations are important determinants of home renovations. Copyright © 2013 by the IAEE. All rights reserved.

Dimensions of Financial Autonomy in Low-/Moderate-Income Couples from a Gender Perspective and Implications for Welfare Reform

The ‘unitary household’ lives on in policymakers’ assumptions about couples sharing their finances. Yet financial autonomy is seen as a key issue in gender relations, particularly for women. This article draws on evidence from semi-structured individual interviews with men and women in thirty low-/moderate-income couples in Britain. The interviews explored whether financial autonomy had any meaning to these individuals; and, if so, to what extent this was gendered in the sense of there being differences in men's and women's understanding of it. We develop a framework for the investigation of financial autonomy, involving several dimensions: achieving economic independence, having privacy in one's financial affairs and exercising agency in relation to household and/or personal spending. We argue that financial autonomy is a relevant issue for low-/moderate-income couples, and that women are more conscious of tensions between financial togetherness and autonomy due to their greater responsibility for managing togetherness and lower likelihood of achieving financial independence. Policymakers should therefore not discount the aspirations of women in particular for financial autonomy, even in low-/moderate-income couples where there remain significant obstacles to achieving this. Yet plans for welfare reform that rely on means testing and ignore intra-household dynamics in relation to family finances threaten to exacerbate these obstacles and reinforce a unitary family model.

Revision rules in the theory of evidence

Combination rules proposed so far in the Dempster-Shafer theory of evidence, especially Dempster rule, rely on a basic assumption, that is, pieces of evidence being combined are considered to be on a par, i.e. play the same role. When a source of evidence is less reliable than another, it is possible to discount it and then a symmetric combination operation is still used. In the case of revision, the idea is to let prior knowledge of an agent be altered by some input information. The change problem is thus intrinsically asymmetric. Assuming the input information is reliable, it should be retained whilst the prior information should
be changed minimally to that effect. Although belief revision is already an important subfield of artificial intelligence, so far, it has been little addressed in evidence theory. In this paper, we define the notion of revision for the theory of evidence and propose several different revision rules, called the inner and outer
revisions, and a modified adaptive outer revision, which better corresponds to the idea of revision. Properties of these revision rules are also investigated.

Designing Bare Essentials: Aldi, Lidle and the architectures of cheapness

They’re cheap. They’re in every settlement of significance in Britain, Ireland and elsewhere. We all use them but perhaps do not always admit to it. Especially, if we are architects.
Over the past decades Aldi/Lidl low cost supermarkets have escaped from middle Europe to take over large tracts of the English speaking world remaking them according to a formula of mass-produced sheds, buff-coloured cobble-lock car parks, logos in primary colours, bare-shelves and eclectic special offers. Response within architectural discourse to this phenomenon has been largely one of indifference and such places remain, perhaps reiterating Pevsner’s controversial insights into the bicycle shed, on the peripheries of what we might term architecture. This paper seeks to explore the spatial complexities of the discount supermarket and in doing so open up a discussion on the architecture of cheapness. As a road-map, it takes former managing director Dieter Brandes’ treatise on the Aldi formula, Bare Essentials: the Aldi Way to Retailing, and investigates the strategies through which economic exigencies manifest themselves in a series of spatial tactics which involve building. Central to this is the idea of architecture as system rather than form and, in Aldi/Lidl’s case, the result of a spatial network of flows. To understand the architecture of the supermarket, then, it is necessary to measure the times and spaces of supply across the scales of intersection between global and local.
Evaluating the energy, economy and precision of such systems challenges the liminal position of the commercial, the placeless and especially the cheap within architectural discourse. As is well known, architectures of mass-production and prefabrication and their origins exercised modernist thinkers such as Sigfried Giedion and Walter Gropius in the early twentieth century and has undergone a resurgence in recent times. Meanwhile, the mapping of the hitherto overlooked forms and iconography of commerce in Learning from Las Vegas (1971) was extended by Rem Koolhaas et al into an investigation of the technologies, systems and precedents of retail in the Harvard Design School Guide to Shopping, thirty years later in 2001. While obviously always a criteria for building, to find writings on architecture which explicitly celebrate cheapness as a design virtue or, indeed, even iterate the word cheap is more difficult. Walter Gropius’ essay ‘How can we build cheaper, better, more attractive houses?’ (1927), however, situates the cheap within the discussions – articulated, amongst others, by Karl Teige and Bruno Taut – surrounding the minimal dwelling and the moral benefits of absence of the 1920s and 30s.
In our contemporary age of heightened consumption, it is perhaps fitting that an architecture of bare essentials is defined in retail rather than in housing, a commercial existenzminimum where the Miesian paradox of ‘less is more’ is resold as a paradigm of ‘more for less’ in the ubiquitous yet overlooked architectures of the discount supermarket.

Avaliação técnica e econômica de um biodigestor de fluxo tubular: estudo de caso do modelo implantado na etec "orlando quagliato" em Santa Cruz do Rio Pardo, SP

Pós-graduação em Agronomia (Energia na Agricultura) - FCA

A modernização do comércio no eixo de Vila Franca de Xira

Dissertação apresentada para cumprimento dos requisitos necessários à obtenção do grau de Mestre em Gestão do Território, especialidade Planeamento e Ordenamento do Território

Three essays on game theory and bargaining

A PhD Dissertation, presented as part of the requirements for the Degree of Doctor of Philosophy from the NOVA - School of Business and Economics

The spin-off of Sonae Capital

The purpose of this project is to study the spin-off of Sonae Capital, which took place in January 2008. Taking the form of a case study, this project is divided between the case narrative and a teaching note. I study the background and motivation of the transaction, along with its outcome. With the available information at the time of the case, I value Sonae Capital at the date of the spin-off and describe a possible trading strategy involving both the spun-off and the demerged companies. Finally, I conclude that the transaction was more beneficial for the parent company, Sonae SGPS, and that it did not follow the typical outperformance pattern observed in other spin-offs.

Tracking error of exchange-traded funds: Evidence from the UK

This paper is mainly concerned with the tracking accuracy of Exchange Traded Funds (ETFs) listed on the London Stock Exchange (LSE) but also evaluates their performance and pricing efficiency. The findings show that ETFs offer virtually the same return but exhibit higher volatility than their benchmark. It seems that the pricing efficiency, which should come from the creation and redemption process, does not fully hold as equity ETFs show consistent price premiums. The tracking error of the funds is generally small and is decreasing over time. The risk of the ETF, daily price volatility and the total expense ratio explain a large part of the tracking error. Trading volume, fund size, bid-ask spread and average price premium or discount did not have an impact on the tracking error. Finally, it is concluded that market volatility and the tracking error are positively correlated.

Three essays on the psychology of investment and financial markets

Préface My thesis consists of three essays where I consider equilibrium asset prices and investment strategies when the market is likely to experience crashes and possibly sharp windfalls. Although each part is written as an independent and self contained article, the papers share a common behavioral approach in representing investors preferences regarding to extremal returns. Investors utility is defined over their relative performance rather than over their final wealth position, a method first proposed by Markowitz (1952b) and by Kahneman and Tversky (1979), that I extend to incorporate preferences over extremal outcomes. With the failure of the traditional expected utility models in reproducing the observed stylized features of financial markets, the Prospect theory of Kahneman and Tversky (1979) offered the first significant alternative to the expected utility paradigm by considering that people focus on gains and losses rather than on final positions. Under this setting, Barberis, Huang, and Santos (2000) and McQueen and Vorkink (2004) were able to build a representative agent optimization model which solution reproduced some of the observed risk premium and excess volatility. The research in behavioral finance is relatively new and its potential still to explore. The three essays composing my thesis propose to use and extend this setting to study investors behavior and investment strategies in a market where crashes and sharp windfalls are likely to occur. In the first paper, the preferences of a representative agent, relative to time varying positive and negative extremal thresholds are modelled and estimated. A new utility function that conciliates between expected utility maximization and tail-related performance measures is proposed. The model estimation shows that the representative agent preferences reveals a significant level of crash aversion and lottery-pursuit. Assuming a single risky asset economy the proposed specification is able to reproduce some of the distributional features exhibited by financial return series. The second part proposes and illustrates a preference-based asset allocation model taking into account investors crash aversion. Using the skewed t distribution, optimal allocations are characterized as a resulting tradeoff between the distribution four moments. The specification highlights the preference for odd moments and the aversion for even moments. Qualitatively, optimal portfolios are analyzed in terms of firm characteristics and in a setting that reflects real-time asset allocation, a systematic over-performance is obtained compared to the aggregate stock market. Finally, in my third article, dynamic option-based investment strategies are derived and illustrated for investors presenting downside loss aversion. The problem is solved in closed form when the stock market exhibits stochastic volatility and jumps. The specification of downside loss averse utility functions allows corresponding terminal wealth profiles to be expressed as options on the stochastic discount factor contingent on the loss aversion level. Therefore dynamic strategies reduce to the replicating portfolio using exchange traded and well selected options, and the risky stock.

Asymmetric Smiles, Leverage Effects and Structural Parameters.

In this paper, we characterize the asymmetries of the smile through multiple leverage effects in a stochastic dynamic asset pricing framework. The dependence between price movements and future volatility is introduced through a set of latent state variables. These latent variables can capture not only the volatility risk and the interest rate risk which potentially affect option prices, but also any kind of correlation risk and jump risk. The standard financial leverage effect is produced by a cross-correlation effect between the state variables which enter into the stochastic volatility process of the stock price and the stock price process itself. However, we provide a more general framework where asymmetric implied volatility curves result from any source of instantaneous correlation between the state variables and either the return on the stock or the stochastic discount factor. In order to draw the shapes of the implied volatility curves generated by a model with latent variables, we specify an equilibrium-based stochastic discount factor with time non-separable preferences. When we calibrate this model to empirically reasonable values of the parameters, we are able to reproduce the various types of implied volatility curves inferred from option market data.

Empirical Assessment of an Intertemporal Option Pricing Model with Latent variables

This paper assesses the empirical performance of an intertemporal option pricing model with latent variables which generalizes the Hull-White stochastic volatility formula. Using this generalized formula in an ad-hoc fashion to extract two implicit parameters and forecast next day S&P 500 option prices, we obtain similar pricing errors than with implied volatility alone as in the Hull-White case. When we specialize this model to an equilibrium recursive utility model, we show through simulations that option prices are more informative than stock prices about the structural parameters of the model. We also show that a simple method of moments with a panel of option prices provides good estimates of the parameters of the model. This lays the ground for an empirical assessment of this equilibrium model with S&P 500 option prices in terms of pricing errors.