Predicting elections from politicians’ faces
"... people’s assessments of relative competence predicted the outcome of
Senate and Congressional races ...
We obtained facial competence ratings of 11 potential candidates for the Democratic Party nomination
and of 13 for the Republican Party nomination
for the 2008 U.S. Presidential election ..."
more
Principle of Uncertain Future
... The probability of a future event contains uncertainty ...
High probabilities will decrease
Phigh real < Phigh planned
Low probabilities can increase
Plow real possible > Plow planned
The present total probability of future events is incomplete
Σ Pplanned < 100%
Uniform solution:
of the underweighting high and the overweighting of low probabilities,
of the Allais paradox, of risk aversion, of the equity premium puzzle,
of the "fourfold pattern" paradox, of the incompleteness of systems of preferences,
of ambiguity aversion, of the Ellsberg paradox, etc.
more
Oil Prices and the Euro-Dollar: Forecasting
...
"If oil exporters stabilize the purchasing power of their export revenues in terms of imports,
exchange rate developments may contain information about oil price changes ...
We give evidence that using information on the US dollar/euro exchange rate
(and its determinants) improves oil price forecasts significantly ..."
more
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Modeling Forecasting Planning
Forecasting
items:
Predicting elections from politicians’ faces
Forecasting
metadata:
Forecasting in the Presence of Uncertainty
news:
The Talmud On Transitivity
...
top's news:
Oil Prices and the Euro-Dollar: Forecasting
...(11)
top authors:
Stiglitz(1)
Shleifer(1)
Baum
(1)
top items:
...
mechanics of economic development
(1)
reviews & analyses:
Inflation Dynamics
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Utility
items
news:
Strotz meets Allais
...
Solution of the Ellsberg paradox
...
Utility
metadata
news:
Utility of gambling II:
...
How Politicians Make Decisions
...
Is There A Plausible Theory
...
Top
An economic index of riskiness
Robert J. Aumann and Roberto Serrano
Instituto Madrile?o de Estudios Avanzados (IMDEA) ...
Abstract
Text
Noise and Bias in Eliciting Preferences
John Hey, Andrea Morone and Ulrich Schmidt
Department of Economics, University of York
Abstract
Text
Principle of uncertain future and utility
Alexander Harin
University Library of Munich, Germany
Abstract
Text
About:
... the uncertainty pushes the probability value
back from the bounds to the middle of the range
(in a sense, similar to the action of vibrations, fluctuations)
Phigh real
< Phigh planned
Plow real possible > Plow planned
Top
Imprecision as an Account of the Preference Reversal Phenomenon
David J. Butler and Graham C. Loomes
American Economic Review 2007
Abstract
About:
"... any successful descriptive theory
of choice and valuation will need to allow in some way for the
imprecision ..."
The Origin of Utility
Gianni De Fraja
C.E.P.R. Discussion Papers 2006
Abstract
Experienced Utility as a Standard of Policy Evaluation
Daniel Kahneman and Robert Sugden
Environmental & Resource Economics 2005
Abstract
Top
Investigating Generalizations of Expected Utility Theory
Using Experimental Data
John Hey and Chris Orme
Econometrica 1994
Abstract
About:
Probably, behavior can be modeled as
expected utility plus noises
and one should pay more attention to the noises,
rather than to even more alternatives to expected utility
Le comportement de l'homme rationnel devant le risque:
critique des postulats et axiomes de l'Ecole Americaine
Maurice Allais
Econometrica 1953
Title
Theory of Games and Economic Behavior
John von Neumann and Oskar Morgenstern
Princeton University Press 1944
Table of contents
Text (txt 1.6 MB)
Text (pdf 33 MB)
Exposition of a New Theory on the Measurement of Risk
Daniel Bernoulli
Commentarii Academiae Scientiarum Imperialis Petropolitanae 1738
Title
Top
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Problems & Paradoxes of Utility Theories:
The Allais paradox (modified)
Suppose Mr. Somebody offers you a choice of only one of the following:
A guaranteed gain of $99.
Or
A lottery:
The gain of $100 with the probability P(preliminary) = 99%
or
$0 with the (preliminary) probability 1%.
The mathematical expectations of guarantee and lottery outcomes
are exactly the same. But people
chose the guaranteed gain instead of the lottery.
Top
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New Approach:
The idea of the approach
Particular consideration of
(hidden)
uncertainties
(noises, fluctuations, measurements' errors, imprecision, etc.)
Principle of Uncertain Future
(simplified as much as possible)
The principle
The probability of a future event contains uncertainty.
1. The first consequence of the principle
Suppose we plan to test the probability value, which is equal to 99%.
Suppose the probability uncertainty value is equal to 5%.
Then, evidently, the real mean value of probability cannot be as high as 99%.
Generally,
High probabilities will decrease.
Phigh real < Phigh planned
Analogously, but considering the second consequence of the principle (see below),
Low probabilities can increase.
Plow real possible > Plow planned
2. The second consequence of the principle
The total probability of unforeseen future events
is more than 0%
Σ Punforeseen real > 0%
Hence,
The present total probability of future events
is less than 100%
Σ Pplanned < 100%
or
The present probability system of future events
is incomplete.
Top
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New Results. Solution & Explanation of Utility Problems:
The strongest qualitative test for Utility Theories is the 4-Fold-Pattern Paradox.
Solution & Explanation
of the 4-Fold-Pattern Paradox
(simplified as much as possible)
The well-determined facts are:
For positive (gains) risky prospects,
people typically
1) overweight low probabilities but
2) underweight high probabilities.
For negative (losses) risky prospects,
people typically
3) underweight low probabilities but
4) overweight high probabilities.
Denoting the real value of probability,
which value is near 100% as
Phigh real
,
the (positive) value of gain as G
and the (negative) value of loss as -G
,
we obtain
Phigh real < Phigh planned
and
G * Phigh real < G * Phigh planned
-G * Phigh real > -G * Phigh planned
2) the underweight of high probabilities gains and
4) the overweight of high probabilities losses.
Denoting the real value of probability,
which value is near 0% as
Plow real possible
we obtain
Plow real possible > Plow planned
and
G * Plow real possible > G * Plow planned
-G * Plow real possible < -G * Plow planned
1) the overweight of low probabilities gains and
3) the underweight of low probabilities losses.
Thus, the above facts can be explained naturally and uniformly.
Top
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