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Loss Aversion and Seller Behavior : Evidence from the Housing Market : Comment Working Paper.

In an often quoted article, Genesove and Mayer (2001) observe
that house sellers are reluctant to sell at a loss, and attribute this
finding to loss aversion. I show that loss aversion cannot explain this
phenomenon.

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The Universal Principle of Biology: Determinism, Quantum Physics and Spontaneity | Grandpierre | NeuroQuantology

For the last four centuries, physics became the pre-eminent natural science. Now it is widely believed that biology will replace physics in prominence. However, systematic efforts to develop a science of theoretical biology on a par with modern theoretical physics in depth and explanatory power have failed. In this paper, we introduce the most promising effort to achieve a fundamental theory of biology, the framework of Ervin Bauer, which includes three requirements for life. The universal principle of biology, which is Bauer’s principle, is introduced and presented in mathematical form. Because he was able to derive all fundamental life phenomena from this single principle, we propose that Bauer’s principle is the first and foundational principle of biology. It can play a central role in biology similar to the one played in physics by the least action principle. We posit that this new picture will open the possibility to achieve an exact theoretical biology. Expanding the conceptual framework of theoretical physics in the most suitable way that is necessary and sufficient for an exact theoretical biology is a challenging task. We also clarify some significant conceptual difficulties of Bauer’s requirements in the context of modern biology, and we fundamentally connect Bauer’s theory to quantum physics. In conclusion, we strongly believe that the only version of modern theoretical biology capable of following in the footsteps of modern physics is Bauer’s theory.
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Reply to criticism of the ‘Orch OR qubit ’– ‘Orchestrated objective reduction’ is scientifically justified

The critical commentary by Reimers et al. [1] regarding the Penrose–Hameroff theory of ‘orchestrated objective reduction’ (‘Orch OR’) is largely uninformed and basically incorrect, as they solely criticize non-existent features of Orch OR, and ignore (1) actual Orch OR features, (2) supportive evidence, and (3) previous answers to their objections (Section 5.6 in our review [2]). Here we respond point-by-point to the issues they raise.

Reimers et al.
... For quantum information processing one must have quantum information storage units such as qubits ... the involvement of quantum gravity in the manifestation of consciousness would need to be described in terms of how quantum gravity affected the operation of these qubits ...

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Sir Roger Penrose — The quantum nature of consciousness - YouTube

Sir Roger Penrose. Quantum Consciousness Theorist — Co-creator of the Orch OR model of the quantum nature of consciousness and memory. http://GF2045.com/speakers/

Knighted in 1994 for his contributions to science, Sir Roger Penrose OM FRS, is an English mathematical physicist, mathematician and philosopher.

The extraordinary scope of his work ranges from quantum physics and theories of human consciousness to relativity theory and observations on the structure of the universe. Penrose is internationally renowned for his scientific work in mathematical physics, in particular for his contributions to general relativity and cosmology. His primary interest is in a field of geometry called tesselation, the covering of surfaces with tiles of different shapes.

Among numerous prizes and awards, he received the 1988 Wolf Prize for physics, which he shared with Stephen Hawking for their contribution to our understanding of the universe.

He is the Emeritus Rouse Ball Professor of Mathematics at the Mathematical Institute of the University of Oxford, as well as an Emeritus Fellow of Wadham College.

"There is a current view that consciousness is something which arises from some complicated computation. So we have our computers, and people think that because they can do things amazingly fast, and they can calculate very quickly, and they can play chess extremely well, that they are superior to us even, and it is only some complicated aspect of this computational activity that somehow consciousness arises from that. Now my view is quite different from this. I think there is a lot of computational activity going on in the brain, but this is basically unconscious. So consciousness seems to me to be something quite different."
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Two Questions I Am Asking to Survive This Market

Two Questions I Am Asking to Survive This Market | Bounded Rationality and Beyond | Scoop.it

In an accelerating world, I find it necessary to always be learning if I hope to survive. With markets exhibiting notable volatility, I would urge all enterprising investors to focus on two important questions that may lead to greater understanding.

Will the Future Look Like the Past?

In his always insightful column in the Wall StreetJournal, Jason Zweig interviewed Robert Shiller, a Nobel laureate in economics and the developer of the cyclically adjusted price/earnings ratio (CAPE). In the interview, there is a particular bit of wisdom for all of us who are condemned one way or another with the task of predicting the future. Shiller said that while the current CAPE level “might be high relative to history . . . how do we know that history hasn’t changed?” The real wisdom is in asking that question. Hopefully, I’ll be able to provide some comparable wisdom of my own in this post. There are at least two reasons to question the validity of the CAPE.

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What behavioural economics tells us about financial adviser greed

What behavioural economics tells us about financial adviser greed | Bounded Rationality and Beyond | Scoop.it

There’s no doubt incentives matter for financial advisers. If an employer pays a higher commission to an adviser for selling one product instead of another, it’s likely the commission-linked product will be sold more often.

This basic reasoning was behind the previous government’s future of financial advice (FoFA) reforms. The question is, why is this so – out of pure greed, or do financial advisers just not know better?

I studied the question of pure greed in experiments in 2011, in a study where an expert/adviser knew better than his or her client what was best for the client, and the expert earned different amounts of money based on the client’s decision.

About one third of the participants in our experiment were consistently driven by their own private benefit, that is they always chose the option that generated the highest profit for them. Roughly another third showed behaviour that can best be described as trying to do the best thing for the client, with the remaining third either behaving inconsistently or being driven by some sort of mixed preference, allowing for distributional concerns.

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How Can Convenience Drive Healthy Behaviour?

How Can Convenience Drive Healthy Behaviour? | Bounded Rationality and Beyond | Scoop.it

Changing human behaviour can be complex. No mathematical equation can determine how we will act from one situation to the next and this uncertainty presents an obvious challenge for marketers, policy makers and employers alike. Common practice has been to rely on assumptions about how people make decisions, based on what we intuitively know about human thinking. If there is one take away from social psychology though, it’s that your intuition, whether or not you’re a marketer with 15 years’ experience, can be extremely biased. Research in this area goes beyond just telling us that decision makers are irrational beings who’ve crossed the path of no return, by providing insights on the best possible way to learn from these biases, to change human behaviour in the desired direction. The beauty of these suggestions are that they are often simple and can be used by anyone, be it the experienced marketer who wants to optimize ad revenue or a mother who wants to influence her child to eat healthy.

 
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An Introduction to Consumer Neuroscience & Neuromarketing

An Introduction to Consumer Neuroscience & Neuromarketing | Bounded Rationality and Beyond | Scoop.it

An Introduction to Consumer Neuroscience & Neuromarketing is a free online class taught by Thomas Zoëga Ramsøy of Copenhagen Business School.

This course will introduce you to the multidisciplinary field of consumer neuroscience and neuromarketing. It will go through to the basic concepts of the human brain, the elements of the consumer mind, how it is studied, and how its insights can be applied in commercial and societal understandings of consumer behaviour.

  
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How Boehner Could Find Blue Sky, Above the Debt Ceiling

How Boehner Could Find Blue Sky, Above the Debt Ceiling | Bounded Rationality and Beyond | Scoop.it
By making one daring proposal, John Boehner, the House speaker, could have himself re-invited to the negotiating table for the nation’s economic future. ALTHOUGH he has been re-elected as House speaker, John Boehner is in danger of becoming irrelevant to the crucial economics discussions that must occur over the next few months.Enlarge This Image A valuable principle of negotiation is to “never bargain with someone who does not have the power to say yes,” and Mr. Boehner has demonstrated that he lacks that power. He couldn’t even persuade his caucus to agree on a Plan B counterproposal and had to let Vice President Joseph Biden and Senator Mitch McConnell, the minority leader, steer the deal that avoided, or at least postponed, the so-called fiscal cliff.I have a suggestion for how Mr. Boehner could have himself invited back to the negotiation party. But first, let’s take stock of where we are.
 
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Evolutionary Economics and Household Behavior

(DP 2014-12) Evolutionary Economics and Household Behavior

Abstract: This paper provides an introduction to the field of evolutionary economics with emphasis on the evolutionary theory of household behavior. It shows that the goal of evolutionary economics is to improve upon neoclassical economics by incorporating more realistic and empirically grounded behavioral assumptions and technological innovation and that the goal of the evolutionary theory of household behavior is to improve upon the neoclassical theory of household behavior by replacing the neoclassical assumption of selfish utility maximization with bounded rationality and satisficing and by incorporating the reaction of households to the introduction of new goods and services. The paper concludes with a brief discussion of loss aversion and self-interest vs. altruism.

 
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Autism Explained: Simple New Theory Links Confusing Array of Symptoms — PsyBlog

Autism Explained: Simple New Theory Links Confusing Array of Symptoms — PsyBlog | Bounded Rationality and Beyond | Scoop.it

New theory may explain the complex set of symptoms seen in autism. People with autism often display a complex and confusing range of symptoms, including hypersensitivity to sound, problems interacting with others and repetitive behaviours. Scientist have long wondered what all these — and other, seemingly unrelated symptoms — have in common.

Now MIT researchers are testing a brand new theory: that autistic children have difficulties predicting what is going to happen next, and it’s this problem that is at the root of autism (Sinha et al., 2014).

 
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How daydreaming can fix your brain

How daydreaming can fix your brain | Bounded Rationality and Beyond | Scoop.it
There's a simple solution, though, that Levitin proposes to alleviate this burden of the digital age: Externalize your memory. Yes, in essence, use your smartphone and other tools more, but use them wisely. Outsource the decisions that you don't need to make. To illustrate this, Levitin describes an encounter he had with then-presidential candidate Jimmy Carter back in 1975. Levitin was just a kid, and yet Carter took the time to talk with him at an event. "I was struck by how it seemed as though he had all the time in the world," recalls Levitin, "and like I was the most important thing in the world at that moment. And I've had this experience over and over again with other highly successful people; where when you're talking to them you just feel like the entire world has vanished and it's just the two of you."
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Emotional Renovations - Issue 8: Home - Nautilus

Emotional Renovations - Issue 8: Home - Nautilus | Bounded Rationality and Beyond | Scoop.it

Home is more than a place on a map. It evokes a particular set of feelings, and a sense of safety and belonging. Location, memories, and emotions are intertwined within those walls. Over the past few decades, this sentiment has gained solid scientific grounding. And earlier this year, researchers identified some of the cells that help encode our multifaceted homes in the human brain.

In the early 1970s, neuroscientist John O’Keefe of University College London and his colleagues began to uncover the brain mechanisms responsible for navigating space. They monitored the electrical activity of neurons within a part of the brain called the hippocampus. As the animals moved around an enclosure with electrodes implanted in their hippocampus, specific neurons fired in response to particular locations.1 These neurons, which came to be known as place cells, each had a unique “place field” where it fired: For example, neuron A might be active when the rat was in the far right corner, near the edge of the enclosure, while neuron B fired when the rat was in the opposite corner.

Since then, further experiments have shown that the hippocampus contains at least two other types of brain cells involved in navigation. Grid cells fire periodically as an animal traverses a space, and head direction cells fire when the animal faces a certain direction.2,3 Together, place cells, grid cells, and head direction cells form the brain’s GPS, mapping the space around an animal and its location within it. 

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The Social Consequences of Collective Emotions: National Identification, Solidarity, and Out-Group Derogation

AbstractThis chapter elaborates on various effects of collective emotions on larger socialunits with a special emphasis on nations and the imagined national community. Basedon Durkheim’s theoretical framework, we discuss empirical evidence regardinginfluence of collective emotions on national identification and emotional climate, onthe perception of national symbols, and on the rejection and derogation of outgroups. Empirical evidence largely supports a positive association of collective emotions withnational identification, emotional climate, and the perception of national symbols.Results on out-group derogation and rejection, however, are less conclusive.  
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Mind-Matter Interaction at a Distance of 190 km: Effects on a Random Event Generator Using a Cutoff Method | Tressoldi | NeuroQuantology

Mind-Matter Interaction at a Distance of 190 km: Effects on a Random Event Generator Using a Cutoff Method | Tressoldi | NeuroQuantology | Bounded Rationality and Beyond | Scoop.it

Abstract

 

We used a new method to test whether subjects could influence the activity of a distant random event generator (REG). In a pilot study, participants selected for their strong motivation and capacity to control their mental activity were requested to alter the functioning of a REG, located in a laboratory approximately 190 km so as to achieve a deviation of ± 1.65 standard scores from the expected mean, during sessions lasting approximately 90 seconds. The predefined cutoff was achieved in 78% of 50 experimental sessions compared to 48% of the control sessions. This study was replicated with a pre-registered confirmatory study involving thirty-four participants selected according the same criteria as in the pilot study. Each participant contributed three sessions completed in three different days giving a total of 102 sessions. The same number of control sessions was carried out. The percentage of the experimental sessions which achieved the predefined cutoff was 82.3% out of 102, compared to 13.7% for the control ones. We discuss the opportunities for exploiting this method as a mental telecommunication device. 
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Consciousness in the universe: A review of the ‘Orch OR’ theory

Abstract

The nature of consciousness, the mechanism by which it occurs in the brain, and its ultimate place in the universe are un- known. We proposed in the mid 1990’s that consciousness depends on biologically ‘orchestrated’ coherent quantum processes in collections of microtubules within brain neurons, that these quantum processes correlate with, and regulate, neuronal synaptic and membrane activity, and that the continuous Schrödinger evolution of each such process terminates in accordance with the specific Diósi–Penrose (DP) scheme of ‘objective reduction’ (‘OR’) of the quantum state. This orchestrated OR activity (‘Orch OR’) is taken to result in moments of conscious awareness and/or choice. The DP form of OR is related to the fundamentals of quantum mechanics and space–time geometry, so Orch OR suggests that there is a connection between the brain’s biomolecular processes and the basic structure of the universe. Here we review Orch OR in light of criticisms and developments in quantum biology, neu- roscience, physics and cosmology. We also introduce a novel suggestion of ‘beat frequencies’ of faster microtubule vibrations as a possible source of the observed electro-encephalographic (‘EEG’) correlates of consciousness. We conclude that consciousness plays an intrinsic role in the universe.

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The science behind how brains process logos

How a brain processes a logo

Because you’re a professional, you know that your logo is the most important first impression you make, especially in a digital world, but do you know how the brain’s visual cortex interacts with that image, and how many milliseconds it takes to process?

No? You’re not alone. Knowing the science behind how the brain “sees” a logo can help to make sure you’re putting your best foot forward.

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The psychology of free samples: how Costco improved sales by 2,000% (or the zero cost effect)

The psychology of free samples: how Costco improved sales by 2,000% (or the zero cost effect) | Bounded Rationality and Beyond | Scoop.it
Get your free samples!

In general, people love anything free: from free WiFi to free books and everything in between,  nothing beats free. However, there seems to be something especially magical about free food; from retail chains to Realtors with open house weekends, nothing drives interest better than the lure of free food.

No other retail chain is more closely associated with free sample offerings than Costco, but why? In some cases, the lure of free samples have boosted sales as much as 2,000%, but it is not just about the monetary factor.

Free samples can influence a shopper’s decision to buy. Many times people will buy something they never intended to, simply because they were offered a free sample. This is not just because we all have a weakness for frozen pizza; as Joe Pinsker at The Atlantic details, there are psychological factors at play whenever we indulge in the free sampling arena.

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Psychology professor's new study shows the social impact of saying 'thanks'

Psychology professor's new study shows the social impact of saying 'thanks' | Bounded Rationality and Beyond | Scoop.it

Dr. Monica Bartlett has a lot to be thankful for.  Bartlett, an assistant professor of psychology at Gonzaga, recently conducted a study to be published in the journal “Emotion” that contains the first known evidence of the positive effects that expressions of gratitude have on the building and strengthening of social relationships. 

Bartlett and Dr. Lisa Williams from the University of South Wales, Australia, brought 70 GU student participants into a lab under the premise that they would be participating in a “peer editing program,” during which they would serve as mentors for high school students writing college essays. At the end of the study, all of the GU participants received a handwritten note from their mentee. Thirty of these handwritten notes contained the words “Thank you SO much,” while the other 40 did not. 

Results showed that the participants who received the thank you notes not only viewed their mentees as warmer people; they were also more willing to continue their relationship with their mentee.  When given the opportunity, most of the 30 participants were willing to share their phone number or email with their mentee for future social interaction.

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Prominence-Interpretation Theory: Explaining How People Assess Credibility Online

ABSTRACT
Four years of research has led to a theory that describes how
people assess the credibility of Web sites. This theory
proposes that users notice and interpret various Web site
elements to arrive at an overall credibility assessment.
Although preliminary, this theory explains previous research
results and suggests directions for future studies.

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Madness, Incorporated: Rethinking mental health diagnoses

Madness, Incorporated: Rethinking mental health diagnoses | Bounded Rationality and Beyond | Scoop.it

President elect of the World Psychiatric Association Dinesh Bhugra, radical psychiatrist David Healy and clinical psychologist Richard Bentall debate the future of psychiatry. From depression to bipolar disorder, we think psychiatric diagnoses are real. Yet many now argue that categories of mental illness have little basis in nature. Is it time to abandon psychiatry and its classifications? Would this usher in a new era of effective health care or cause widespread harm?

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There are several ways to incorporate evolutionary concepts into economic thinking

Abstract
There are several ways to incorporate evolutionary concepts into economic thinking. This article reviews the most important transfers of this kind into evolutionary economics. It broadly differentiates between approaches that draw on an analogy construction to the biological sphere, those that make metaphorical use of Darwinian ideas, and avenues that are based on the fact that other forms of – cultural – evolution rest upon foundations laid before by natural selection. It is shown that an evolutionary approach within economics informed by insights from cognitive science, evolutionary biology, and anthropology contributes to more realistic models of human behavior in economic contexts.

ftp://137.248.191.199/RePEc/esi/discussionpapers/2014-02.pdf

#neuroeconomics 

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Accepting Your Bias

Accepting Your Bias | Bounded Rationality and Beyond | Scoop.it
Everyone has a bias. No single person has a perfect view of reality. Instead, we each have our own window into reality. And everyone's view is going to be a little bit different. 

Every mind has a bias, because everyone’s beliefs and worldview are shaped by their own unique experiences within a particular environment.

So no single person has a perfect view of reality. Instead, we each have our own window into reality. And everyone’s view is going to be a little bit different.

Therefore, every person you meet knows something that you don’t know. And you know something that they don’t know. That’s a powerful insight to keep in mind.

When you accept your bias, it actually puts you in a better position to learn new things and expand your perspective.

You recognize that everyone has something to teach you, so you should be willing to listen to all perspectives, and try to find a grain of truth.

This doesn’t necessarily mean that all truth is subjective, or just a matter of opinion. It’s the acceptance that your knowledge is limited – you know some things, and you’re ignorant about others.

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Why is Behavioral Economics so Revolutionary?

Why is Behavioral Economics so Revolutionary? | Bounded Rationality and Beyond | Scoop.it

Imagine that a patient suffering from unusually profound amnesia has two toasters in his kitchen. The toaster on the right functions normally. The toaster on the left delivers an electric shock when the toast is removed. The patient’s gasp and quick retraction of his hand indicate that the shock is painful. Because the patient does not remember the experience, however, he does not anticipate the shock the next morning, and is consequently indifferent between the toasters. Although the decision utility he obtains is the same for both toasters, otherwise he wouldn’t be indifferent between them; the experienced utilities are quite different for each of the toasters; something he only realizes when he uses one of them.

Systematic discrepancies between decision utility and experienced utility, as research in the field of behavioral decision theory has been shown, are not restricted to pathological cases. They can also be observed in decision makers whose cognitive functions are normal. These observations question on the idea that observed choices provide a direct measure of utility, and is revolutionizing the way we look at society and policy.

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The psyco-economy of Charlie Brown: Matteo Motterlini at TEDxLakeComo - YouTube

Philosopher and neuroeconomist . He studied philosophy, economics and cognitive sciences in Milan, the London School of Economics and Carnegie Mellon University. He teaches a combination of these at San Raffaele. He currently lives in Santa Monica, California where he is conducting some new neuroeconomics experiments at UCLA. He is studying human irrationality and how we make (or are made to make) our decisions. He is director at The Center for Research in Experimental and Applied Epistemology (www.cresa.eu) on learning how to decide better. He has written books translated and appreciated around the world (Emotional Economics, Rizzoli 2006 and Cognitive Traps, Rizzoli, 2008).
In the spirit of ideas worth spreading, TEDx is a program of local, self-organized events that bring people together to share a TED-like experience. At a TEDx event, TEDTalks video and live speakers combine to spark deep discussion and connection in a small group. These local, self-organized events are branded TEDx, where x = independently organized TED event. The TED Conference provides general guidance for the TEDx program, but individual TEDx events are self-organized.* (*Subject to certain rules and regulations)
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Behavioral Finance and Agent Based Model: the new evolving discipline of quantitative behavioral finance ?

Abstract: The financial crisis of recent years has deeply questioned the ability of the traditional economic models to help to govern the complexity of the modern financial world. A growing number of scholars, practitioners, and regulators agree that the recurring financial crisis as well as the overwhelming evidence of market anomalies could be explained only resorting to behavioral finance. Behavioral finance has been able to identify the individual investor irrationality but unable to quantify its total effect on the market in terms of price deviation from fundamental. Quantitative Behavioral Finance (QBF) is an emerging discipline that attempts to model the impact of human cognitive biases over asset prices. The aim of this paper is to provide an overview of its theoretical foundations and its challenges. The paper is divided in two parts. In the first one, we present a much selected literature review of the key theoretical foundations. Why does this new field of study emerge ? What topics does it study ? Which disciplines have contributed the most and why ? In the second part, the paper sketches an outline and provides a preliminary, set of references about the agent-based model approach as one of the most promising line of research in quantitative modeling the behavioral investorsÕ impact on the market. The literature surveyed supports the use of this class of models because of their capability in copying with heterogeneous agentsÕ behaviours either rational or bounded rational without losing the ability to identify and examine how each of them operates separately or in interaction. Taken as a whole, the articles reviewed here indicate that many open issues remains both on the theoretical design of agent based models, due to the large degree of freedom of modelers, and on the empirical use of this class of models for real political economic implications, due to the arduous methods for the model validation, calibration and estimation.

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