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Uncertainty Aversion
In decision theory and economics, ambiguity aversion (also known as uncertainty aversion) is a preference for known risks over unknown risks. An ambiguity-averse individual would rather choose an alternative where the probability distribution of the outcomes is known over one where the probabilities are unknown. This behavior was first introduced through the Ellsberg paradox (people prefer to bet on the outcome of an urn with 50 red and 50 black balls rather than to bet on one with 100 total balls but for which the number of black or red balls is unknown). There are two categories of imperfectly predictable events between which choices must be made: risky and ambiguous events (also known as Knightian uncertainty). Risky events have a known probability distribution over outcomes while in ambiguous events the probability distribution is not known. The reaction is behavioral and still being formalized. Ambiguity aversion can be used to explain incomplete contracts, volatility in stoc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Decision Theory
Decision theory or the theory of rational choice is a branch of probability theory, probability, economics, and analytic philosophy that uses expected utility and probabilities, probability to model how individuals would behave Rationality, rationally under uncertainty. It differs from the Cognitive science, cognitive and Behavioural sciences, behavioral sciences in that it is mainly Prescriptive economics, prescriptive and concerned with identifying optimal decision, optimal decisions for a rational agent, rather than Descriptive economics, describing how people actually make decisions. Despite this, the field is important to the study of real human behavior by Social science, social scientists, as it lays the foundations to Mathematical model, mathematically model and analyze individuals in fields such as sociology, economics, criminology, cognitive science, moral philosophy and political science. History The roots of decision theory lie in probability theory, developed by Blai ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Nash Equilibrium
In game theory, the Nash equilibrium is the most commonly used solution concept for non-cooperative games. A Nash equilibrium is a situation where no player could gain by changing their own strategy (holding all other players' strategies fixed). The idea of Nash equilibrium dates back to the time of Cournot, who in 1838 applied it to his model of competition in an oligopoly. If each player has chosen a strategy an action plan based on what has happened so far in the game and no one can increase one's own expected payoff by changing one's strategy while the other players keep theirs unchanged, then the current set of strategy choices constitutes a Nash equilibrium. If two players Alice and Bob choose strategies A and B, (A, B) is a Nash equilibrium if Alice has no other strategy available that does better than A at maximizing her payoff in response to Bob choosing B, and Bob has no other strategy available that does better than B at maximizing his payoff in response to Alice c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mathematics Of Operations Research
''Mathematics of Operations Research'' is a quarterly peer-reviewed scientific journal established in February 1976. It focuses on areas of mathematics relevant to the field of operations research such as continuous optimization, discrete optimization, game theory, machine learning, simulation methodology, and stochastic models. The journal is published by INFORMS (Institute for Operations Research and the Management Sciences). the journal has a 2017 impact factor of 1.078. History The journal was established in 1976. The founding editor-in-chief was Arthur F. Veinott Jr. (Stanford University). He served until 1980, when the position was taken over by Stephen M. Robinson, who held the position until 1986. Erhan Cinlar served from 1987 to 1992, and was followed by Jan Karel Lenstra (1993-1998). Next was Gérard Cornuéjols (1999-2003) and Nimrod Megiddo (2004-2009). Finally came Uri Rothblum (2009-2012), Jim Dai (2012-2018), and the current editor-in-chief Katya Scheinberg (20 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Uncertainty Avoidance
In cross-cultural psychology, uncertainty avoidance is how cultures differ on the amount of tolerance they have of unpredictability. Uncertainty avoidance is one of five key qualities or ''dimensions'' measured by the researchers who developed the Hofstede's cultural dimensions theory, Hofstede model of cultural dimensions to quantify cultural differences across international lines and better understand why some ideas and business practices work better in some countries than in others. According to Geert Hofstede, "The fundamental issue here is how a society deals with the fact that the future can never be known: Should we try to control it or just let it happen?" The uncertainty avoidance dimension relates to the degree to which individuals of a specific society are comfortable with uncertainty and the unknown. Countries displaying strong uncertainty avoidance index (UAI) believe and behave in a strict manner. Individuals belonging to those countries also avoid unconventional way ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Uncertainty
Uncertainty or incertitude refers to situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown, and is particularly relevant for decision-making. Uncertainty arises in partially observable or stochastic environments, as well as due to ignorance, Laziness, indolence, or both. It arises in any number of fields, including insurance, philosophy, physics, statistics, economics, finance, medicine, psychology, sociology, engineering, metrology, meteorology, ecology and information science. Concepts Although the terms are used in various ways among the general public, many specialists in decision theory, statistics and other quantitative fields have defined uncertainty, risk, and their measurement as: Uncertainty The lack of certainty, a state of limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Simplicity
Simplicity is the state or quality of being wikt:simple, simple. Something easy to understand or explain seems simple, in contrast to something complicated. Alternatively, as Herbert A. Simon suggests, something is simple or Complexity, complex depending on the way we choose to describe it. In some uses, the label "simplicity" can imply beauty, purity, or clarity. In other cases, the term may suggest a lack of nuance or complexity relative to what is required. The concept of simplicity is related to the field of epistemology and philosophy of science (e.g., in Occam's razor). Religions also reflect on simplicity with concepts such as divine simplicity. In human Lifestyle (sociology), lifestyles, simplicity can denote freedom from excessive possessions or distractions, such as having a simple living style. In some cases, the term may have negative connotations, as when referring to someone as a simpleton. In philosophy of science There is a widespread philosophical presumption t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Precautionary Principle
The precautionary principle (or precautionary approach) is a broad epistemological, philosophical and legal approach to innovations with potential for causing harm when extensive scientific knowledge on the matter is lacking. It emphasizes caution, pausing and review before leaping into new innovations that may prove disastrous. Critics argue that it is vague, self-cancelling, unscientific and an obstacle to progress. In an engineering context, the precautionary principle manifests itself as the factor of safety. It was apparently suggested, in civil engineering, by Belidorde Bélidor, Bernard Forest, La science des ingénieurs, dans la conduite des travaux de fortification et d'architecture civile, Paris: Chez Claude Jombert 1729 in 1729. Interrelation between safety factor and reliability is extensively studied by engineers and philosophers. The principle is often used by policy makers in situations where there is the possibility of harm from making a certain decision (e.g. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
David Schmeidler
David Schmeidler (; 1939 – 17 March 2022) was an Israeli mathematician and economic theorist. He was a Professor Emeritus at Tel Aviv University and the Ohio State University. Biography David Schmeidler was born in 1939 in Kraków, Poland. He spent the war years in Russia and moved back to Poland at the end of the war and to Israel in 1949. From 1960 to 1969 he studied mathematics at the Hebrew University of Jerusalem (BSc, MSc, and PhD), the advanced degrees under the supervision of Robert Aumann. He visited the Catholic University of Louvain and University of California at Berkeley before joining Tel-Aviv University in 1971, holding professorships in statistics, economics, and management. He held a part-time position as professor of economics at the Ohio State University since 1987. Schmeidler died on 17 March 2022. Main contributions Schmeidler's early contributions were in game theory and general equilibrium theory. He suggested a new approach to solving cooperati ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Choquet Expected Utility
A Choquet integral is a subadditive or superadditive integral created by the French mathematician Gustave Choquet in 1953. It was initially used in statistical mechanics and potential theory, but found its way into decision theory in the 1980s, where it is used as a way of measuring the expected utility of an uncertain event. It is applied specifically to membership functions and capacities. In imprecise probability theory, the Choquet integral is also used to calculate the lower expectation induced by a 2-monotone lower probability, or the upper expectation induced by a 2-alternating upper probability. Using the Choquet integral to denote the expected utility of belief functions measured with capacities is a way to reconcile the Ellsberg paradox and the Allais paradox. Multiobjective optimization problems seek Pareto optimal solutions, but the Pareto set of such solutions can be extremely large, especially with multiple objectives. To manage this, optimization often focus ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Ambiguity Tolerance
Ambiguity is the type of meaning in which a phrase, statement, or resolution is not explicitly defined, making for several interpretations; others describe it as a concept or statement that has no real reference. A common aspect of ambiguity is uncertainty. It is thus an attribute of any idea or statement whose intended meaning cannot be definitively resolved, according to a rule or process with a finite number of steps. (The prefix '' ambi-'' reflects the idea of " two", as in "two meanings"). The concept of ambiguity is generally contrasted with vagueness. In ambiguity, specific and distinct interpretations are permitted (although some may not be immediately obvious), whereas with vague information it is difficult to form any interpretation at the desired level of specificity. Linguistic forms Lexical ambiguity is contrasted with semantic ambiguity. The former represents a choice between a finite number of known and meaningful context-dependent interpretations. The ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Ambiguity Effect
The ambiguity effect is a cognitive tendency where decision making is affected by a lack of information, or "ambiguity". The effect implies that people tend to select options for which the probability of a favorable outcome is known, over an option for which the probability of a favorable outcome is unknown. The effect was first described by Daniel Ellsberg in 1961. Example As an example, consider a bucket containing 30 balls. The balls are either red, black or white. Ten of the balls are red, and the remaining 20 are either black or white, with all combinations of black and white being equally likely. In option X, drawing a red ball wins a person $100, and in option Y, drawing a black ball wins them $100. The probability of picking a winning ball is the same for both options X and Y. In option X, the probability of selecting a winning ball is 1 in 3 (10 red balls out of 30 total balls). In option Y, despite the fact that the number of black balls is uncertain, the probability of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Strategic Dominance
In game theory, a strategy ''A'' dominates another strategy ''B'' if ''A'' will always produce a better result than ''B'', regardless of how any other player plays. Some very simple games (called straightforward games) can be solved using dominance. Terminology A player can compare two strategies, A and B, to determine which one is better. The result of the comparison is one of: * B strictly dominates (>) A: choosing B always gives a better outcome than choosing A, no matter what the other players do. * B weakly dominates (≥) A: choosing B always gives at least as good an outcome as choosing A, no matter what the other players do, and there is at least one set of opponents' actions for which B gives a better outcome than A. (Notice that if B strictly dominates A, then B weakly dominates A. Therefore, we can say "B dominates A" to mean "B weakly dominates A".) * B is weakly dominated by A: there is at least one set of opponents' actions for which B gives a worse outcome than A, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
