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| §1.10 distinguishes between fundamental and derived measurement: “… we can define fundamental measurement as the construction of scales by mapping an empirical relational system isomorphically into a numerical relational system. Derived measurement, on the other hand, derives a new scale from other given scales.”
Lemma 3.5.9: an ordered set is connected w.r.t. order topology iff it has no gaps (a b but (a,b) is empty) and is order-complete (each nonempty subset with lower bound has infimum, or, equivalently, each nonempty subset with upper bound has supremum). Corollary 5.4.2: if X is connected and an operation * is cancellable and continuous, then autodistributivity ((a*b)*c= (a*c) * (b*c)) implies bisymmetry. Cancellability is something like antisymmetry plus strict monotonicity. Formally, it means that a*b is 1-1 (injective) in each of its variables, at whatever level the other variable is fixed. P. 107: the only weak point I discovered in this phantastic book so far: he writes Archimedian iso Archimedean. criticizing the dangerous role of technical axioms such as continuity: §6.6 (pp. 107-108) has a good discussion of, and even formal theorems on, the dangerous empirical status of technical (Pfanzagl says objectionable if finite observations cannot falsify) axioms such as continuity and solvability, often overlooked. (Remark on p. 111 gives another nice statement.) Definition 6.6.3 gives a definition of “technical” as Pfanzagl calls it). In the presence of other axioms, they do have empirical content but it may not be clear what that content is. See also §9.1 of Krantz et al. (1971). A strengthening of Adams, Fagot, & Robinson (1970, at the time of Pfanzagl’s book unpublished) is given. §9.5 will explain that continuity is dangerous in adding empirical implications. Theorem 9.5.5 suggests that continuity w.r.t. connected topology does not add further dangerous implications to strong solvability. Tradeoff method: Def. 8.6.8 is in fact a version of the * relation defined in my book Wakker (1989) and used in what I call TO consistency nowadays. The definition of F12 implies that (c1, F12(c1)) ~ (d1, F12(d1)), and this together with (a1, F12(c1)) ´ (b1, F12(d1)) (´ denoting reversed preference) makes Pfanzagl write a1b1 ´ c1d1, where I would write a1b1 ´* c1d1 in my 1989 book and a1b1 ´t c1d1 in my 2010 book (were it not that in the latter I only consider indifferences ~´t). Note that Pfanzagl’s solution condition entails a strong solvability condition. Pfanzagl pleas for this approach with tradeoffs (called distances in his terminology). Remark 9.4.5 ends with: “We are of the opinion that the indirect way over distances makes the whole approach more intuitive.” Ch. 12 does DUU in a multistage setup. Sure-thing principle is formulated as monotonicity, together with a “lack of illusion” condition that apparently entails RCLA, it entails the known things. Axiom 12.5.2 assumes that for each event there exists another independent event, where independence means that conditioning does not affect preference. biseparable utility: Corollary 12.5.8 (p. 211) has it only for additive measures S, with additivity proved in Theorem 12.5.9, and later conditions given that subjective probability agree with objective if existing. The text is restricted to repeatable events and compound gambles, although it could have been restricted to static gambles and certainty-equivalent substitution. %} Pfanzagl, Johann (1968) “Theory of Measurement.” Physica-Verlag, Vienna. {% If w has infinite derivative at 0, then prospects with finite expected value can have infinite PT value. This paper proposes weighting functions that avoid this problem. %} Pfiffelmann, Marie (2011) “Solving the St. Petersburg Paradox in Cumulative Prospect Theory: The Right Amount of Probability Weighting,” Theory and Decision 71, 325–341. {% Z&Z; survey on effects of coinsurance etc. on demand for health care %} Phelps, Charles E. & Joseph P. Newhouse (1974) “Co-Insurance, the Price of Time, and the Demand for Medical Services,” Review of Economics and Statistics 66, 334–342. {% They introduced quasi-hyperbolic. %} Phelps, Edmund S. & Robert A. Pollak (1968) “On Second-Best National Saving and Game-Equilibrium Growth,” Review of Economic Studies 35, 185–199. {% %} Philippe, Fabrice (2000) “Cumulative Prospect Theory and Imprecise Risk,” Mathematical Social Sciences 40, 237–263. {% %} Philippe, Fabrice, Gabriel Debs, & Jean-Yves Jaffray (1999) “Decision Making with Monotone Lower Probabilities of Infinite Order,” Mathematics of Operations Research 24, 767–784. {% %} Phillips J.P.N. (1969) “A Further Procedure for Determining Slater’s i and All Nearest Adjoining Orders,” British Journal of Mathematical and Statistical Psychology 22, 97–101. {% Bayes’ formula intuitively; seem to find that people reply best when in log odds units. %} Phillips, Lawrence D. & Ward Edwards (1966) “Conservatism in a Simple Probability Inference Task,” Journal of Experimental Psychology 72, 346–354. {% This paper axiomatizes a generalization of utilitarianism, with separability maintained. For every welfare allocation, a set of opportunities plays a role. I did not come to full understanding. The author discussed interpersonal comparability of utiity, and whether to use ordinal or cardinal inputs. %} Piacquadio, Paolo Giovanni (2017) “A Fairness Justification of Utilitarianism,” Econometrica 85, 1261–1276. {% My comments concern the 1957 English translation. Funny examples of “conservation errors” in physics. Suppose liquid is poured from one form into another. Children under 7 will not recognize that the amount was unchanged. conservation of influence: p. 213 2nd para: “without conservation of totalities” (about children up to seven years of age). Throughout the book, the term irreversibility is used as something crucial for randomness, but I hardly understood more of the term than that it means randomness. First children have to get a concept of implication, then that implication does not work 100% so there is unpredictability, then they can get some awareness of chance. §X.2, p. 216 etc., argues that in many ways babies, like even the most primitive animals, can exhibit behavior adapted to chance, but this is animal spirit not real awareness. P. 217 2nd para: “But it would be idle to draw from these functional analogies a structural identity and to attribute to the nursing infant operative structures, whether deductive or probabilistic.” Stage I is from 4 to 7, stage 2 from 7 to 11, stage/level 3 after 11. Stage I is subdivided into level I A and I B. Stage I consists of levels I A and I B, stage II also consists of levels II A and II B, stage III/level III is not subdivided I guess. Ch. VI (pp 131-160): “The Quantification of Probabilities.” P. 131: “On the other hand, the progress supposes the gradual ability to establish a relationship between the individual cases and the whole distribution;” For the frequentist understanding of probability, the heads coming up on different tosses of a coin, different individual events, must indeed be grouped together and the child must be able to do that mentally. P. 132 2nd para gives a nice description of the growing awareness of numerical probability. Also on p. 133 last para (on level I B: “or there is an intuitive comparison deriving from the perception of striking disproportionalities”). Level I A understands that things can be unpredictable (“chance”). See, for example, §X.2, p. 218, “From the functional point of view, there is certainly at this time a notion which performs the function of the possible, and this is precisely the idea that the near future is made up of events which one is not certain that he can anticipate.” P. 138 last para, on level I A: “If the child had the least bit of quantified probabilistic intuition, ” I think that somewhere else there is a text that the child neither distinguishes quantitatively nor qualitatively. A little bit of differentiation between different levels of likelihood arises at level I B, see p. 133 last para (on level I B: “or there is an intuitive comparison deriving from the perception of striking disproportionalities”). Level II knows that 4 out of 7 is more likely than 3 out of seven or 4 out of 8, but cannot compare 4 out of 7 to 2 out of 6. Note that the perception is not just a function of objective probability because 1/2 = 5/10 need not be understood. P. 228, 2nd para, on level II: “This again is easily explained as a function of operative development.” Level III can distinguish numerical probabilities well. So level I A is Principle of Complete Ignorance where there is, in the terminology of decision theory, true, untrue, or possible. My claim seems to be contradicted by several writings by Piaget & Inhelder that children at stage I cannot differentiate between the possible and the necessary. For example, this is the title of §X.2 on p. 216. However, the second half of the second para on p. 218 shows that Piaget & Inhelder consider possibility only understood if some logical operations like complementarity and their interaction with possible are also understood. So he uses the term possible in a more restrictive sense. See also third para of p. 214 and the last para of §X.3, on p. 230. %} Piaget, Jean & Bärbel Inhelder (1951) “La Genèse de l’Idée de Hasard chez l’Enfant.” Presses Universitaires de France, Paris. Translated into English by Lowell Leake, Jr., Paul Burrell, & Harold D. Fishbein: Piaget, Jean & Bärbel Inhelder (1975) “The Origin of the Idea of Chance in Children.” Norton, New York. {% Seems to have nicely expressed experimenter’s demand: “It is to the highest degree probable that the subject[’s] . . . general attitude of mind is that of ready complacency and cheerful willingness to assist the investigator in every possible way by reporting to him those very things which he is most eager to find, and that the very questions of the experimenter . . . suggest the shade of reply expected. . . . Indeed . . . it seems too often as if the subject were now regarded as a stupid automaton.” %} Pierce, Artur H. (1908) “The Subconscious Again,” Journal of Philosophy, Psychology, & Scientific Methods 5, 264–271. {% absentminded driver; seems that they introduced the beautiful sleeping beauty paradox. %} Piccione, Michele & Ariel Rubinstein (1997) “On the Interpretation of Decision Problems with Imperfect Recall,” Games and Economic Behavior 20, 3–24. {% foundations of statistics; Ancillary statistics, nuisance parameters, that this is not very nice for classical frequentist statistics %} Pierce, David A. & Dawn Peters (1994) “Higher-Order Asymptotics and the Likelihood Principle: One-Parameter Models,” Biometrika 81, 1–10. {% Risk averse for gains, risk seeking for losses: the energy-budget rule from biology (also found by Caraco 1981) says that optimal foraging should be risk averse when above energy requirements, and risk seeking when below. The authors verify this finding for risky monetary choices by humans, with repeated choices with repeated real payments, and find it confirmed. Of course, in full agreement with prospect theory! %} Pietras, Cynthia J., Gabriel D. Searcy, Brad E. Huitema, & Andrew E. Brandt (2008) “Effects of Monetary Reserves and Rate of Gain on Human Risky Choice under Budget Constraints,” Behavioural Processes 78, 358–373. {% probability communication: %} Pighin, Stefania, Michel Gonzalez, Lucia Savadori, & Vittorio Girotto (2015) “Improving Public Interpretation of Probabilistic Test Results Distributive Evaluations,” Medical Decision Making 35, 12–15. {% probability communication: They reanalyze existing data and report new data suggesting that natural frequencies are NOT better ways to report probabilities. %} Pighin, Stefania, Michel Gonzalez, Lucia Savadori, & Vittorio Girotto (2016) “Natural Frequencies Do not Foster Public Understanding of Medical Test Results,” Medical Decision Making 36, 686–691. {% probability communication & ratio bias: Compare perceptions of 1:100 versus 5:500 and so on. Find, unlike other studies, that the latter is weighted less than the former. Maybe because for health outcomes are losses? Study also other forms of probability communication. %} Pighin, Stefania, Lucia Savadori, Elisa Barilli, Laura Cremonesi, Maurizio Ferrari, & Jean-François Bonnefon (2011) “The 1-in-X Effect on the Subjective Assessment of Medical Probabilities,” Medical Decision Making 31, 721–729. {% discounting normative: p. 25 argues that discounting is irrational; a vague citation by Strotz (1956, p. 172) suggests that Pigou considered discounting to be a defect of our telescope. marginal utility is diminishing; r.av. = dim.marg.utility; P. 729 of 1924 edn. seems to write on decreasing ARA/increasing RRA (well, third derivative iso RRA) Appendix XI is on utility, which is taken as satisfaction normative maximandum P. 785 seems to write, on linear utility for small stakes: “a small change in the consumption of any ordinary commodity ... cannot involve any appreciable change in the marginal desiredness of money.” P. 847: Marshall said that economics has advantage over other social sciences because it has money as a measuring rod. P. 849: says that strength of pref. comparisons are possible as judgments, i.e., “comparable in principle,” but not through measurement, so they are not comparable “in fact.” §V of Appendix XI, p. 850, is nice. It says that interpersonal comparability of utility cannot be proved, but that the burden of evidence is on the other side. %} Pigou, Arthur C. (1920) “The Economics of Welfare.” (edn. 1952: MacMillan, London.) {% linear utility for small stakes: a central accepted point in a debate about mathematical correctness of some formulas. %} Pigou, Arthur C., Milton Friedman, & Nicholas Georgescu-Roegen (1936) “Marginal Utility of Money and Elasticities of Demand,” Quarterly Journal of Economics 50, 532–539. {% §3.1: utility is ordinal; §3.5: marginal utility is diminishing! %} Pindyck, Robert S. & Daniel L. Rubinfeld (2001) “Microeconomics.” Prentice Hall International, London. {% His surname is “Pinto” and not “Luis Pinto.” Tradeoff method: person-tradeoff method asks: if 10 healthy people could live, or 11 blind, what would you decide if you were policy maker? So, no probabilities but frequencies. It does not ask people how good they consider something to be for themselves, but rather what they would decide if they were policy makers. Paper considers some measurement methods and sees how they agree with Euroqol measurements etc. %} Pinto, José Luis (1997) “Is the Person Trade-off a Valid Method for Allocating Health Care Resources?,” Health Economics 6, 71–81. {% P. 581 shows that the authors allow for normative status of probability weighting and loss aversion (contrary to me and contrary to Diecidue & Wakker 2001, unlike the reference on p. 581 end of 3rd para). Argue that if different measurement methods give different results, then there is no way of telling which is best. %} Pinto, José Luis & Jose-Maria Abellan-Perpiñan (2012) “When Normative and Descriptive Diverge: How to Bridge the Difference,” Social Choice and Welfare 38, 569–584. {% The lead time tradeoff is like the regular TTO (time tradeoff), but adds a period of good health before the other periods considered. Under time separability, it should not matter. Empirically, big differences are found. (intertemporal separability criticized) %} Pinto, José Luis & Eva Rodríguez-Míguez (2015) “The Lead Time Tradeoff: The Case of Health States Better than Dead,” Medical Decision Making 35, 276–291. {% Prospect theory need not explain the Yitzhaki Puzzle. %} Piolatto, Amedeo & Matthew D. Rablen (2017) “Prospect Theory and Tax Evasion: A Reconsideration of the Yitzhaki Puzzle,” Theory and Decision 82, 543–565. {% dynamic consistency: favors abandoning time consistency, so, favors sophisticated choice; updating %} Pires, Cesaltina Pacheco (2002) “A Rule for Updating Ambiguous Beliefs,” Theory and Decision 53, 137–152. {% crowding-out: seem to survey the crowding-out effect as studied by psychologists. %} Pittman, Thane S. & Jack F. Heller (1987) “Social Motivation,” Annual Review of Psychology 38, 461–489. {% Aggregation of incomplete vNM preferences, with discussions of interpersonal comparability of utility. %} Pivato, Marcus (2013) “Risky Social Choice with Incomplete or Noisy Interpersonal Comparisons of Well-being,” Social Choice and Welfare 40, 123–139. {% strength-of-preference representation; Uses Hahn’s embedding theorem. But it does not go for lexicographic presentation, but instead for incompleteness with multi-function unanimity representation à la Dubra, Maccheroni, & Ok (2004). Under solvability, it gives necessary and sufficient conditions, mostly a sort of concatenation condition (called divisibility); (x1,x2) (x,x) (positiveness of (x1,x2) then positivity of any n-fold self-concatenation of (x1,x2) with itself. %} Pivato, Marcus (2013) “Multiutility Representations for Incomplete Difference Preorders,” Mathematical Social Sciences 66, 196–220. {% Dutch book; ordered vector space Considers a preference relation on a product set XI with I an infinite set, implying infinite dimensions. And then additive representations, many without an Archimedean axiom and with nonstandard real numbers. The paper gives a valuable collection of references to related works in intertemporal choice, decision under uncertainty, welfare, and so on. This paper considers additive representation with symmetry. It considers preferences between sequences that differ only on finitely many dimensions, so that the overtaking criterion can be used (x > y iff SUM_i(U(xi)U(yi)) > 0). U can take values in extended versions of , in Abelian ordered groups. Cites Hahn's embedding theorem (p. 56) mapping it into a lexicographically ordered vector space. Necessary and sufficient conditions for additive representation are joint independence (= separability = sure-thing principle) and symmetry. At first I was surprised that this can be done with no richness such as connected-continuity or solvability in the outcome space or state space. But then I realized that the infinite symmetric coordinates generate additions of any length. We can calibrate U(x)/U(y) versus the rational number m/n by considering the preference between n states with x and m states with y. So this gives an equivalent of richness in the state space. P. 35 Example (ii): if infinitely many states are equally likely (by symmetry), and acts differ on only finitely many of them, then acts differ only on null sets. Proposition 5(a) is Theorem 1.1 of Wakker (1986, Theory and Decision). %} Pivato, Marcus (2014) “Additive Representation of Separable Preferences over Infinite Products,” Theory and Decision 73, 31–83. {% According to Harvey (1994), Plato thinks timing aversion is shortsightedness. %} Plato, “Protagoras.” {% Seems to say, fourth century before Christ, that 50% of human talents is located in female brains, and that that is wasted if women do not participate in work, government, etc. Seems that he recognized that for physical labor men may be more suited due to their stronger muscles. %} Plato, “The Republic.” {% The authors argue and document that in real-life decisions for gains the correlation between probabilities and outcomes usually is negative: high probabilities occur with low probabilities. P. 2013 ff. argues and documents that for laboratory experiment of risk attitudes there is no such relation. This effect can contribute to ambiguity aversion, and this becoming stronger as outcomes get higher. An experiment, study 3, p. 2010 ff., confirms it. I think that this finding is of special interest to DFE, but the authors do not discuss it. On p. 2008 l. -3 and elsewhere the authors incorrectly suggest that the dependence between probabilities and outcomes that they have found be inconsistent with Savage (1954) who assumed that probabilities of events are independent of outcomes. Savage’s independence concerns a mathematical independence once the event capturing all relevant uncertainty has been completely specified, and is a completely different concept. It would be absurd if Savage had claimed that high outcomes empirically occur as often with high probabilities as with low probabilities. %} Pleskac, Timothy J. & Ralph Hertwig (2014) “Ecologically Rational Choice and the Structure of the Environment,” Journal of Experimental Psychology: General 143, 2000–2019. {% decreasing ARA/increasing RRA: constant proportional tradeoffs implies power utility for life duration; utility elicitation %} Pliskin, Joseph S., Donald S. Shepard, & Milton C. Weinstein (1980) “Utility Functions for Life Years and Health Status,” Operations Research 28, 206–224. {% revealed preference %} Plott, Charles R. (1973) “Path Independence, Rationality, and Social Choice,” Econometrica 41, 1075–1091. {% risky utility u = transform of strength of preference v, latter doesn’t exist: p. 541 seems to say that intensity of preference is meaningless. %} Plott, Charles R. (1976) “Axiomatic Social Choice Theory: An Overview and Interpretation,” American Journal of Political Science 20, 511–596. {% %} Plott, Charles R. (1986) “Rational Choice in Experimental Markets,” Journal of Business 59, S301–S327. {% Proposes the “discovered preference hypothesis.” Argues that people have a consistent set of preferences but that such preferences become known to a person (are “discovered”) only through thought and experience in repeated choices. This is distinguished from the constructive approach on pp. 227-228. %} Plott, Charles R. (1996) “Rational Individual Behaviour in Markets and Social Choice Processes: The Discovered Preference Hypothesis.” In Kenneth J. Arrow, Enrico Colombatto, Mark Perlman, & Christian Schmidt (eds.) The Rational Foundations of Economic Behavior: Proceedings of the IEA Conference Held in Turin, Italy, 225–250, St. Martins Press, New York. {% %} Plott, Charles R. (1996) “Comment.” In Kenneth J. Arrow, Enrico Colombatto, Mark Perlman, & Christian Schmidt (eds.) The Rational Foundations of Economic Behavior: Proceedings of the IEA Conference Held in Turin, Italy, 220–224, St. Martins Press, New York. {% P. 667: Christiane, Veronika & I: pay in so-called francs. They deliberately did this so as to control numerical aspects and avoid small numbers. %} Plott, Charles R. & Shyam Sunder (1982) “Efficiency of Experimental Security Markets with Insider Information: An Application of Rational-Expectations Models,” Journal of Political Economy 90, 663–698. {% Many papers have demonstrated loss aversion and the endowment effect, finding loss aversion parameters of 2.25 etc. These studies have usually been designed to be optimal for the presence and detection of the effect, where framings must be properly chosen and, given the irrationality of the effects mentioned, subjects are not understanding things at a high level of rationality. It is first-gut preferences that are being examined in such studies. Nowadays, many studies have come to overstate their case, as if loss aversion were ubiquitous. Then it is useful that there come a counterreaction, showing that loss aversion need not arise under proper framing and instructions. Although the latter point is in fact trivial, it is useful that it be demonstrated very explicitly in these days. This paper provides such a demonstration. As the loss aversion papers have sometimes gone too far, this paper goes too far in the opposite direction by claiming that loss aversion is only misconception and, “hence,” not worth studying, and that prospect theory and the endowment effect are, consequently, not valid theories. This is obviously an overstatement. Prospect theory and the endowment effect are theories about misconceptions (which contradicts the claim of Plott & Zeiler in several places, e.g. p. 531 2nd column second para, of such theories not existing) occurring in gut-feeling preferences. These exist, affect economic phenomena, and or worthy of study also by economists just as well as the sophisticated preferences that are Plott’s primary interest. For prescriptive purposes the sophisticated Plott-interest-preferences are more important than the gut-feeling Kahneman-interest-preferences. I am, accordingly, more interested in the Plott-preferences, but both kinds are interesting and worth being studied. random incentive system: p. 534 footnote 5, bringing the old Holt (1986) argument, shows that the authors, as so many other experimental economists, are not up to date on the random incentive system, the incentive system used by Holt & Laury (2002, AER), Harrison, Lau, & Williams (2002, AER), and many others. Pp. 537-538 is nice statement of how subjects who do not understand the instructions can behave strategically even if irrational in WTP-WTA. The conclusions of this paper are based on acceptance of null hypotheses under big variance, which is overstated several times (e.g. p. 542, end of §III, “allows us to reject strongly the hypothesis that …”). P. 541, 2nd column, top, to the contrary, nicely has a rejection of loss aversion exceeding 2. Seem to criticize BDM (Becker-DeGroot-Marschak). %} Plott, Charles R. & Kathryn Zeiler (2005) “The Willingness to Pay-Willingness to Accept Gap, the “Endowment Effect,” Subject Misconceptions, and Experimental Procedures for Eliciting Valuations,” American Economic Review 95, 530–545. {% My notes are at the Isoni et al. comment %} Plott, Charles R. & Kathryn Zeiler (2011) “The Willingness to PayWillingness to Accept Gap, the “Endowment Effect”, Subject Misconceptions, and Experimental Procedures for Eliciting Valuations: Reply,” American Economic Review 101, 1012–1028. {% Introductory book, written for lay audience, good for students?? %} Plous, Scott (1993) “The Psychology of Judgment and Decision Making.” McGraw-Hill, New York. {% %} Pogrebna, Ganna (2010) “Ambiguity Preference Reversals,” Department of Economics, University of Warwick, UK. {% updating; Urn with 20 balls has X yellow balls, with X unknown to subjects. Subjects are asked to guess X, receiving rewards if their guess is right. So they should choose the most likely value X. All values of X have the same (2nd order) probability 1/21 of being that. So in principle subjects can calculate the optimal replies, using Bayes formula, in what follows. But, as is well known, they don’t. Subjects observe a sample and then guess X. Next they get extra info about X being 10 or < 10, and can readjust. If the new info contradicts their original estimate, the extra info improves their guess. Paradoxically, if the new info confirms their original estimate, it worsens their predictions. %} Poinas, François, Julie Rosaz, & Béatrice Roussillon (2012) “Updating Beliefs with Imperfect Signals: Experimental Evidence,” Journal of Risk and Uncertainty 44, 219–241. {% %} Pojman, Louis P. (1986) “Religious Belief and the Will.” Routledge & Kegan Paul, London. {% foundations of statistics; nice explanation of likelihood principle simple exposition of the discussion, yes, for economists; followed by discussions, a.o. by Geweke on tractability of Bayesian methods %} Poirier, Dale J. (1988) “Frequentist and Subjective Perspectives on the Problems of Model Building in Economics,” Journal of Economic Perspectives 2 no. 1, 121–144. {% %} Poisson, Siméon D. (1837) “Recherches sur la Probabilité des Jugements et Matière Criminelle et Matière Civile.” Bachelier, Paris. {% Use revealed preference data from multichoices to reveal the smooth ambiguity model. %} Polemarchakis, Herakles, Larry Selden, & Xinxi Song (2017) “The Identification of Attitudes towards Ambiguity and Risk from Asset Demand,” working paper. {% Bayes’ formula intuitively; foundations of statistics (through psychological experiments) %} Poletiek, Fenna H. (1996) “Paradoxes of Falsification,” Quarterly Journal of Experimental Psychology 49A, 447–462. {% Bayes’ formula intuitively; foundations of statistics (through psychological experiments) %} Poletiek, Fenna (2000) “Hypothesis-Testing Behaviour.” Psychology Press, Hampshire. {% foundations of statistics %} Poletiek, Fenna H. & Mariëtte Berndsen (2000) “Hypothesis Testing as Risk Behavior with Regard to Beliefs,” Journal of Behavioral Decision Making 13, 107–123. {% Subjects choose from budget sets reflecting state-contingent payoffs with known probabilities, so, decision under risk, similar to Choi et al. (2007). They consider 50-50 and 1/3-2/3 lotteries. They use an Afriat-type index of deviation to test fit of models. One contribution of the paper concerns the analysis of the data, which works not only for linear choice sets but for any compact choice set. The test is parameter-free, i.e., all utility functions and other components such as probability weighting are allowed. Some more than half the subjects can be fit well with EU. RDU improves the rest well. Disappointment aversion does not do so well. The authors also consider a monotonic generalization of EU that does well in fitting, but does not seem to be related to an interesting theory. The relative good performance of EU may be because it is taken very general, allowing any utility function, and the stimuli have not been targeted to discriminate theories. In particular, no very small or large probabilities were involved. %} Polisson, Matthew, John Quah, & Ludovic Renou (2017) “Revealed Preferences over Risk and Uncertainty,” {% Uses a.o. his intuitive criterion based on experts’ judgments. %} Politser, Peter (1991) “Do Decision Analyses’ Largest Gains Grow from the Smallest Trees?,” Journal of Behavioral Decision Making 4, 121–138. {% Argues that RDU and T&K 92 PT are very useful for financial economics. Finds, through simulations and analysis of market data, that rank-dependent models can explain portfolio choices, comparative statics, lack of diversification, and violations of mean-variance efficiency to the favor of long-shot risk seeking, very well. P. 1483 ll. 1-2 claim that risk aversion iff w(p) p but this is not correct because it also depends on utility. %} Polkovnichenko, Valery (2005) “Household Portfolio Diversification: A Case for Rank-Dependent Preferences,” Review of Financial Studies 18, 1467–1502. {% inverse-S: show theoretically that several properties of empirical pricing kernels are consistent with rank-dependent utility with inverse-S probability weighting. Conclusion (p. 606): “Our results confirm that probability weighting is an important and empirically relevant element for under- standing asset prices.” %} Polkovnichenko, Valery & Feng Zhao (2013) “Probability Weighting Functions Implied in Options Prices,” Journal of Financial Economics 107, 580–609. {% %} Pollak, Robert A. (1967) “Additive von Neumann-Morgenstern Utility Functions,” Econometrica 35, 485–494. {% dynamic consistency; Introduced sophisticated planning?? No, Strotz (1956) had the concept before but Pollak introduced the term (p. 203 l. 15 and 18), or at least was an early user of the term. Pollak demonstrates a mathematical mistake in Strotz’s optimal path theorem. %} Pollak, Robert A. (1968) “Consistent Planning,” Review of Economic Studies 35, 201–208. {% Assumes habit formation; i.e., utility /demand of present consumption is endowed with terms from past consumption. Sees how then long-term demand can have different characteristics than short-term. Shows that, contrary to what was assumed before, Slutsky’s conditions are problematic; i.e., the demand functions need not be related to utility functions. %} Pollak, Robert A. (1970) “Habit Formation and Dynamic Demand Functions,” Journal of Political Economy 78, 745–763. {% Beginning about revealed preference, restrictions and extensions of budget sets %} Pollak, Robert A. (1990) “Distinguished Fellow: Houthakker’s Contributions to Economics,” Journal of Economic Perspectives 4 no. 2, 141–156. {% paternalism/Humean-view-of-preference; What policy to take if public perceives risks differently than specialists? Go public’s way, or specialists’? How much weight to give to “psychic benefits?” Paper doesn’t take one point or other, but presents pros and cons. %} Pollak, Robert A. (1998) “Imagined Risks and Cost-Benefit Analysis,” American Economic Review, Papers and Proceedings 88, 376–380. {% Work typical of philosophers. Discussions of the basic principles of choice theory. Things are never fully formalized, though. If plans are chosen, then suddenly we read that simultaneously other plans can be chosen etc. Such work is important prior to stages of complete formalization, and is as indispensable as the work after formalizations have been chosen. P. 82 seems to assign a special meaning to utility level 0, by assigning it to doing nothing. conservation of influence: p. 81 distinguishes deciding-whether from deciding-which. Paper also deals with problems of future and partial influence. And that we can do good decisions without knowing they are optimal, because we don’t know all options. %} Pollock, John L. (2005) “Plans and Decisions,” Theory and Decision 57, 79–107. {% Loss aversion is reduced when it concerns others. %} Polman, Evan (2012) “Self–Other Decision Making and Loss Aversion,” Organizational Behavior and Human Decision Processes 119, 141–150. {% Tester accepting/rejecting forecasts of experts. %} Pomatto, Luciano, Nabil Al-Najjar, & Alvaro Sandroni (2014) “Claim Validation,” American Economic Review 104, 3725–3736. {% %} Pomatto, Luciano, Nabil Al-Najjar & Alvaro Sandroni (2014) “Merging and Testing Opinions,” Annals of Statistics 42, 1003–1028. {% Christiane, Veronika & I: seems that they paid in numbers without telling subjects what the real unit would be, in order to “create a more stimulating situation” (p. 569). %} Pommerehne, Werner W., Friedrich Schneider, & Peter Zweifel (1982) “Economic Theory of Choice and the Preference Reversal Phenomenon: A Re-Examination,” American Economic Review 72, 569–574. {% Presented as main lecture in SPUDM2007 by Kacelnik. conservation of influence: initial idea presented by Alex at SPUDM (just for illustration, not one supported by data): in rainy season lion can get wilderbeasts in plenty, and one more is not very valuable. In dry season lion has no food and getting a rabbit or not may decide on survival, so that a rabbit is very valuable. Given a straight choice between wilderbeast and rabbit, the lion will remember the bigger happiness felt when rabbits, so will choose the rabbit, even though the wilderbeast is superior food. The lion forgot to reckon with the state-dependence of the happiness because of the rabbit which was gotten in much worse circumstances. %} Pompilio, Lorena, Alex Kacelnik & Behmer, Spencer T. (2006) “State-Dependent Learned Valuation Drives Choice in an Invertebrate,” Science 311, 1613–1615. {% Games with incompete information, value of information %} Ponssard, Jean-Pierre (1976) “On the Concept of the Value of Information in Competitive Situations,” Management Science 22, 739–747. {% In golf (where I will not be able to use the jargon very well; sorry) the par is the average score. A golf player for a birdie does one better than average when succeeding, and otherwise will be equal or worse than par. A golfer playing for par does as good as average when succeeding, and otherwise is worse. They are, on average, some better when playing for par than playing for birdie. The authors can explain this using loss aversion. It is myopic loss aversion with real incentives and high stakes. The authors cite List, Rabin (2000), Köszegi & Rabin (2006), and others for being the classics that they are generally considered to be, all in full 100% agreement with the common ideas of prospect theory. %} Pope, Devin G. & Maurice E. Schweitzer (2011) “Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes,” American Economic Review 101, 129–157. {% %} Pope, Robin E. (1990) “Rational People Do Not Always Prefer Stochastically Dominant Prospects,” Paper presented at 5th FUR Conference, Duke University. {% dynamic consistency: favors abandoning RCLA when time is physical %} Pope, Robin E. (1995) “Towards a More Precise Decision Framework; A Separation of the Negative Utility of Chance from Diminishing Marginal Utility and the Preference for Safety,” Theory and Decision 39, 241–265. {% A theory is proposed where the timing of the receipt of information about future outcomes plays a role, following up on many preceding papers by Pope. Although it is called theory, it is in reality only a not well organized and not well related number of qualitative claims. %} Pope, Robin & Reinhard Selten (2010/2011) “Risk in a Simple Temporal Framework for Expected Utility Theory and for SKAT, the States of Knowledge Ahead Theory,” Risk and Decision Analysis 2, 5–32. {% %} Pope, Rulon D. & Richard E. Just (1977) “On the Competitive Firm under Production Uncertainty,” Australian Journal of Agricultural Economics 21, 111–118. {% An uncertain item of very positive value alone is evaluated higher than the same uncertain item when combined with a sure extra item of positive but smaller value. Explanation is that sure item is used to estimate value of better item. Is similar to the violation of stochastic dominance found by Birnbaum, Coffey, Mellers, & Weiss (1992) which is related to an idea of Slovic. Also resembles Gneezy, List, & Wu (2007). %} Popkowski Leszczyc, Peter T.L., John W. Pracejus, & Yingtao Shen (2008) “Why More Can Be Less: An Inference-Based Explanation for Hyper-Subadditivity in Bundle Valuation,” Organizational Behavior and Human Decision Processes 105, 233–246. {% conservation of influence: abstract math. theories and I could not relate to them. Dit not seem to relate to my interests. %} Popovych, Roman O., Michael Kunzinger, & Nataliya M. Ivanova (2008) “Conservation Laws and Potential Symmetries of Linear Parabolic Equations,” Acta Applicandae Mathematicae 100, 113–185. {% On falsifiability. Good to cite, together with Carnap’s (1923) logical positivism, as basis of revealed preference. The book is sometimes dated 1935, but 1934 is best. %} Popper, Karl R. (1934) “Logik de Forschung.” Springer, Berlin. Translated into English as Popper, Karl R. (1959) “The Logic of Scientific Discovery,” Hutchingson and Co., London. {% %} Popper, Karl R. (1959) “Logik de Forschung: The Logic of Scientific Discovery.” Hutchingson and Co., London. {% foundations of probability: Pp. 34 & 37 seem to discuss the frequentist interpretation of probability. %} Popper, Karl R. (1959) “The Propensity Interpretation of Probability,” British Journal for the Philosophy of Science 10, 25–42. {% %} Popper, Karl R. (1962) “Conjecture and Refutations: The Growth of Scientific Knowledge.” Harper Torchbooks, New York. {% PT falsified: a detailed study finding many violations of gain-loss separability in PT, using both CE measurements and choice. They use randomly generated stimuli. %} Por, Han-Hui & David V. Budescu (2013) “Revisiting the Gain–Loss Separability Assumption in Prospect Theory,” Journal of Behavioral Decision Making 26, 385–396. {% probability elicitation: Let subjects estimate probability ratios. This works better than direct probability estimates, closer to real probabilities and fewer biases. The first, small, experiment, sort of pilot, had hypothetical choice. The 2nd paid for closeness of prtobability estimate to real probability. %} Por, Han-Hui & David v. Budescu (2017) “Eliciting Subjective Probabilities through Pair-wise Comparisons,” Journal of Behavioral Decision Making 30, 181–196. {% Citation of Keynes (1921, p. 308). “In order to judge of what we ought to do in order to obtain a good and to avoid an evil, it is necessary to consider not only the good and evil in themselves, but also the probability of their happening and not happening, and to regard geometrically the proportion which all these things have, taken together.” Is this the first statement of the expectation principle, even more so in the context of the expected utility criterion to guide decisions, with also utility recognizable in the sense that the good and the evil are apparently assumed quantifiable because a geometric mean (I assume probability-weighted average) can be taken? %} “The Port Royal Logic” (1662) English translation. {% foundations of statistics; History of statistics; %} Porter, Theodore M. (1986) “The Rise of Statistical Thinking, 1820-1900.” Princeton University Press, Princeton NJ. {% Results are applied in Post et al. (2002, Stroke) %} Post, Piet N., Anne M. Stiggelbout, & Peter P. Wakker (2001) “The Utility of Health States Following Stroke; a Systematic Review of the Literature,” Stroke 32, 1425–1429. Link to paper
Post, Piet N., Job Kievit, Jary M. van Baalen, Wilbert B. van den Hout, & Hajo van Bockel (2002) “Routine Duplex Surveillance Does not Improve the Outcome after Carotid Endarterectomy,” Stroke 33, 749–755. {% Suppose that deep preferences depend only on wealth. Ranking in society decides hoe wealthy a partner one gets, so how wealthy one gets after marriage. The induced reduced-form preferences suggest that not only wealth but also ranking matters for utility. In a complete model, ranking itself does not “directly” influence utility but is instrumental in getting wealth. P. 782: “In interesting economic models, agents’ preferences are either unchanging over time, or change in a very structured way depending on history.” P. 791: “As we have repeatedly stressed, adding arguments in the utility function weakens the predictions that can be made.” %} Postlewaite, Andrew (1998) “The Social Basis of Interdependent Preferences,” European Economic Review 42, 779–800. {% Giving possibility to commit to consumptions reduces costs. Can make risk-neutral agent behave as if risk averse for small stakes but risk seeking for large (p.s.: inverse-S?). %} Postlewaite, Andrew, Larry Samuelson, & Dan Silverman (2008) “Consumption Commitments and Employment Contracts,” Review of Economic Studies 75, 559–578. {% Considers 4 risks that can terminate mankind: big astroid, global warming, and two others. %} Posner, Richard (2004) “Catastrophe: Risk and Response.” Oxford University Press, New York. {% Analyze the famous deal-or-no-deal show, where there are risky decisions with real incentives for hundreds of thousands of dollars. Qualitatively, they find that subjects become more risk seeking both by prior losses (break-even) and by prior gains (house-money effect). They find expected utility rejected (p. 57 l. 6). Prospect theory with some assumptions about reference points (e.g. p. 61 2nd para) explains the data well. For simplicity, they do not incorporate probability weighting (p. 62 3rd para). Reference points are path-dependent in the sense of being affected by prior gains or losses. Had the authors analyzed only the shows of one country, they could not have concluded this because prior gains or losses are then inextrically correlated with remaining stakes. They, however, analyzed different countries and did separate experiments that use different stakes so that they could compare people who face the same future stakes but some with prior gains and others with prior losses. There are some weird sentences stating that they do not accept or reject EU or any other theory (p. 40 penultimate para, p. 67 bottom), where EU is defended by the possibility of choosing strange utility functions (with convex segments and depending on prior gains, the latter being in fact prospect theory framing with reference dependence and not EU). However, there are oceans of literature, since Friedman & Savage (1948) showing that such functions are no good so the statements are absurd. One of the authors told me they added these claims reluctantly because one referee insisted much on it. Another illustration that referees have too much power in the present system. decreasing ARA/increasing RRA: they find it confirmed (p. 45 bottom, p. 46) §4: in EU analysis, they use expo-power utility with initial wealth just as additional free parameter (p. 52 end of 1st para). NonEU in dynamic situations is done through backward induction. %} Post, Thierry, Martijn van den Assem, Guido Baltussen, & Richard Thaler (2008) “Deal or No Deal? Decision Making under Risk in a Large-Payoff Game Show,” American Economic Review 98, 38–71. {% crowding-out: government subsidies seem to crowd-out private donations and charitable contributions. %} Poterba, James M., Stephen F. Venti & David A. Wise (1998) “401(k) Plans and Future Patterns of Retirement Saving,” American Economic Review 88, 179–184. {% correlation risk & ambiguity attitude: seem to find a weak positive relation %} Potamites, Elizabeth & Bei Zhang (2007) “Measuring Ambiguity Attitudes: A Field Experiment among Small–Scale Stock Investors in China,” Working Paper, New York University. {% Aangeraden door Peep Stalmeier %} Poulton, E. Christopher (1979) “Models for Biases in Juding Sensory Magnitude,” Psychological Bulletin 86, 777–803. {% (Taken from a Birnbaum 1992 review) Ch. 4 is on how small other stimuli in the experiment may lead to overestimation of a stimulus now considered, and so on. Ch. 5 is on the centering bias, Ch. 6 on the logarithmic bias (taking ratios, for instance, where differences should be taken; I guess it is like the ratio bias). Ch. 7 is on contraction biases (staying too close to average, as with regression to the mean), Ch. 8 is on range-equalizing biases (subects tend to just map whatever stimulus range presented onto the whole response-range presented). Ch. 9 is on transfer bias, where questions in experiments are influences by the other questions presented. Ch. 10 argues, in the log-power controversy, that power does not work. %} Poulton, E. Christopher (1989) “Bias in Quantifying Judgments.” Erlbaum, Hillsdale NJ. {% %} Poupart, Pascal, Craig Boutilier, Relu Patrascu, & Dale Schuurmans (2002) “Piecewise Linear Value Function Approximation for Factored MDPs,” Dept. of Cumputer Science, University of Toronto, Toronto, Canada. {% Using the Indonesia Family Life Survey data, this paper finds that SEL (subjective economic ladder) is determined by the rank in society rather than by absolute level. %} Powdthavee, Nattavudh (2009) “How Important is Rank to Individual Perception of Economic Standing? A within-Community Analysis,” Journal of Economic Inequality 7, 225–248. {% gender differences in risk attitudes: women are somewhat more risk averse than men. correlation risk & ambiguity attitude: although they have data, they do not report on this point. Seems they found women also to be more ambiguity averse, but I could not find it stated clearly. %} Powell, Melanie & David Ansic (1997) “Gender Differences in Risk Behaviour in Financial Decision-Making: An Experimental Analysis,” Journal of Economic Psychology 18, 605–628. {% Download 7.23 Mb. Share with your friends:
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