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Complexity Thinking

An overview of Systems Thinking, and how to apply the ideas of Complexity Theory to management of systems, with the results being called "Complexity Thinking".

Via Philippe Vallat
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Government-By-Nudge Is a Global Phenomenon | Big Think

Government-By-Nudge Is a Global Phenomenon | Big Think | Bounded Rationality and Beyond | Scoop.it

Nudges, "choice architecture," social marketing and other non-rational approaches to government are a pretty significant development. After all, these policies replace explicit arguments ("you should get more exercise for these reasons") with hidden persuasion ("in our next building, let's hide the elevator and make the stairs really prominent?"). That's a major change for any democracy. Yet many people are unimpressed, because they think of these policies as a pack of First World Problems. We in the rich world hear of these policies when they're put in place to prompt us to eat less, exercise more, save money for retirement and otherwise act sensibly. How privileged we are to worry about such things, when people in less prosperous countries face beheadings, plane crashes, Ebola or the arrival of jackbooted thugs at 2 a.m. You might think most governments have more pressing things to do than use behavioral research to get citizens to become an organ donor. But if you think that, you are wrong, as this study reveals (pdf). Its authors found non-rational approaches to persuasion are now in use in a large majority of nations—rich, middling and poor.

 
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Dr. Lisa Kramer -Expert in Behavioural Finance and Neuroeconomic

Dr. Lisa Kramer -Expert in Behavioural Finance and Neuroeconomic | Bounded Rationality and Beyond | Scoop.it
Expert in Behavioural Finance and Neuroeconomics

Stirring up controversy in financial circles for over a decade with her seminal contributions bridging the gap between rational finance and behavioural finance, Dr. Lisa Kramer is no stranger to the dynamic marketplace of ideas. An expert on behavioural finance, investments, capital market seasonality, behavioral economics, neuroeconomics, and personal finance, Dr. Kramer captivates audiences with her real-time demonstrations of human biases. Participants come away with a deeper understanding of recent, state-of-the-art developments in the exciting field of behavioural finance.

Dr. Kramer’s research has been profiled in The Wall Street Journal, US News and World Reports, The Washington Post, The Daily Telegraph, Business Week, Fast Company, The National Post, The Globe and Mail, and on CBC Television and Radio.

She received her PhD in finance from the Sauder School of Business at the University of British Columbia and is an Associate Professor of Finance at the University of Toronto. She has also held the Canadian Securities Institute Research Foundation Term Professorship, and spent a sabbatical as a visiting scholar in the Psychology Department at Stanford University where she conducted ground-breaking research.

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Should You Be Able to Sue the Government That Nudged You? | Big Think

Should You Be Able to Sue the Government That Nudged You? | Big Think | Bounded Rationality and Beyond | Scoop.it

"Nudge" policies are spreading across the globe because they supposedly offer a less expensive and more effective way to get people to make the "right" decisions. In the original formulation, such decisions are defined as those that people would like to have made, had they not been hobbled and blinkered at the time by irresistible irrationality.

As practiced by governments, non-profits and companies, though, the ideal is not always respected, and supposedly "nudgey" policies are often justified as benefitting society as a whole. Critics of the nudge approach often ask how the nudge squads can be so sure that they know what people would want if they were in their right mind, or even what is best for any individual, or for society. Experts, after all, often make mistakes. A recent conversation along those lines got me to wondering: If a citizen feels she has been hurt by a decision that she was "nudged" to make, should she be able to sue the nudgers for damages?

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Collective choices under ambiguity

Abstract: We investigate experimentally whether collective choice matters for individual attitudes to ambiguity. We consider a two-urn Ellsberg experiment: one urn offers a 45% chance of winning a fixed monetary prize, the other an ambiguous chance. Participants choose either individually or in groups of three. Group decision rules vary. In one treatment the collective choice is taken by majority; in another it is dictated by two group members; in the third it is dictated by a single group member. We observe high proportions of ambiguity averse choices in both individual and collective decision making. Although a majority of participants display consistent ambiguity attitudes across their decisions, collective choice tends to foster ambiguity aversion, especially if the decision rule assigns asymmetric responsibilities to group members. Previous participation in laboratory experiments may miti- gate this.

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The science behind Isil's savagery - Telegraph

The science behind Isil's savagery - Telegraph | Bounded Rationality and Beyond | Scoop.it

Carrying out beheadings and other extreme acts is unthinkable for most people, but the right cocktail of factors can make anyone an extremist, says neuroscientist Prof Ian Robertson.

....

You can see it in the faces of the young male Islamic State militants as they race by on their trucks, black flags waving, broad smiles on their faces, clenched fists aloft, fresh from the slaughter of infidels who would not convert to Islam. What you can see is a biochemical high from a combination of the bonding hormone oxytocin and the dominance hormone testosterone. Much more than cocaine or alcohol, these natural drugs lift mood, induce optimism and energise aggressive action on the part of the group. And because the individual identity has been submerged largely into the group identity, the individual will be much more willing to sacrifice himself in battle – or suicide bombing, for that matter. Why? – Because if I am submerged in the group, I live on in the group even if the individual “me”, dies.

When people bond together, oxytocin levels rise in their blood, but a consequence of this is a greater tendency to demonise and de-humanise the out-group. That is the paradox of selfless giving to your in-group – it makes it easier for you to anaesthetise your empathy for the out-group and to see them as objects. And doing terrible things to objects is fine because they are not human.....

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Behavioral Public Economics Welfare and Policy Analysis wit Non-Standard Decision-Makers

Abstract: This paper has two goals. First, we discuss several emerging approaches to applied welfare analysis under non-standard (“behavioral”) assumptions concerning consumer choice.
This provides a foundation for Behavioral Public Economics. Second, we illustrate applications of these approaches by surveying behavioral studies of policy problems involving saving, addiction, and public goods. We argue that the literature on behavioral public economics, though in its infancy, has already fundamentally changed our understanding of public policy in each of these domains.

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Was the European sovereign crisis self-fulfilling? Empirical evidence about the drivers of market sentiments

Abstract

We investigate the presence of self-fulfilling dynamics during the European sovereign crisis in the light of a theoretical model that we bring to the data. Our empirical framework allows us to empirically test the presence of self-fulfilling dynamics and to identify what may have driven the market sentiment during this crisis. To do so we estimate the probability of default of five European “peripheral” countries during January 2006 to September 2011 with a panel smooth threshold regression. Our estimation results suggest that (1) both the fundamentals and “animal spirit” ignited the European sovereign crisis; (2) we isolate the risk indicator through which investors’ belief coordinate.

  
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Optimal Capital Taxation and Consumer Uncertaint

Abstract

This paper analyzes the impact of consumer uncertainty on optimal fiscal policy in a model with capital. The consumers lack confidence about the probability model that characterizes the stochastic environment and so apply a max–min operator to their optimization problem. An altruistic fiscal authority does not face this Knightian uncertainty. We show analytically that, in responding to consumer uncertainty, the government no longer sets the expected capital tax rate exactly equal to zero, as is the case in the full-confidence benchmark model. Rather, our numerical results indicate that the government chooses to subsidize capital income, albeit at a modest rate. We also show that the government responds to consumer uncertainty by smoothing the labor tax across states and by making the labor tax persistent.

  
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The improvisatory approach to classical music performance: An empirical investigation into its characteristics and impact

IMPROVVISARE SEMPRE!

I ricercatori hanno scoperto che gli ascoltatori si interessano alla musica classica più quando i musicisti improvvisano.
Una collaborazione di ricercatori dell'Imperial College di Londra e la Guildhall School of Music and Drama ha esaminato i segnali elettrici nel cervello dei musicisti e ascoltatori. 
Anche se l'improvvisazione non è comunemente associata con la musica classica, il nuovo studio suggerisce che l'introduzione di elementi di improvvisazione in concerti di musica classica potrebbe aumentare il coinvolgimento del pubblico.

Researchers have found that listeners engage with classical music more when musicians improvise.
A collaboration of researchers from Imperial College London and the Guildhall School of Music and Drama examined the electrical signals in the brains of musicians and listeners. 
Although improvisation is not commonly associated with classical music, the new study suggests that introducing elements of improvisation into classical concerts could increase audience engagement.

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Memory integration: neural mechanisms and implications for behavior

Memory integration: neural mechanisms and implications for behavior | Bounded Rationality and Beyond | Scoop.it

Everyday behaviors require a high degree of flexibility, in which prior knowledge is applied to inform behavior in new situations. Such flexibility is thought to be supported in part by memory integration, a process whereby related memories become interconnected in the brain through recruitment of overlapping neuronal populations. Recent advances in cognitive and behavioral neuroscience highlight the importance of a hippocampal–medial prefrontal circuit in memory integration. Emerging evidence suggests that abstracted representations in medial prefrontal cortex guide reactivation of related memories during new encoding events, thus promoting hippocampal integration of related experiences. Moreover, recent work indicates that integrated memories are called upon during novel situations to facilitate a host of behaviors, from spatial navigation to imagination.

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María Dolores Díaz Noguera's curator insight, September 26, 1:43 PM

Memory integration: neural mechanisms and implications for behavior

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The Biology Of Altruism: Good Deeds May Be Rooted In The Brain

The Biology Of Altruism: Good Deeds May Be Rooted In The Brain | Bounded Rationality and Beyond | Scoop.it

Angela Stimpson donated a kidney to a complete stranger. Why did she do it? Researchers found that the brains of Stimpson and other altruists are sensitive to fear and distress in a stranger's face. Most of the tests didn't find any differences between the brains of the altruistic donors and the people who had not been donors. Except, Marsh says, for a significant difference in a part of the brain called the amygdala, an almond-shaped cluster of nerves that is important in processing emotion. 

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Do gut bacteria rule our minds?

Do gut bacteria rule our minds? | Bounded Rationality and Beyond | Scoop.it
It sounds like science fiction, but it seems that bacteria within us — which outnumber our own cells about 100-fold — may very well be affecting both our cravings and moods to get us to eat what they want, and often are driving us toward obesity.

In an article published this week in the journal BioEssays, researchers from UC San Francisco, Arizona State University and University of New Mexico concluded from a review of the recent scientific literature that microbes influence human eating behavior and dietary choices to favor consumption of the particular nutrients they grow best on, rather than simply passively living off whatever nutrients we choose to send their way.


In an article published this week in the journal BioEssays, researchers from UC San Francisco, Arizona State University and University of New Mexico concluded from a review of the recent scientific literature that microbes influence human eating behavior and dietary choices to favor consumption of the particular nutrients they grow best on, rather than simply passively living off whatever nutrients we choose to send their way.

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[1409.3120] Complex Network Approach to Number Theory

In this short paper, following the most recent advances in complex network theory, a new approach to number theory with potential applications to other fields is proposed. The model by Garcia-Perez, Serrano and Boguna, introduces an algorithm which allows to create a bipartite graph of integers (with primes and composites) statistically very close to the real one. Since the algorithm is defined {\it a priori}, we can have a description of the simulated prime number distribution in terms of a known differential equation, which in general can be treated more easily. The so determined properties of the simulated distribution can give useful hints about the behavior of the real prime number distribution. In principle it could be also possible to demonstrate open questions in number theory, proven the total equivalence of the simulated and real distributions. I show that the model by Garcia-Perez, Serrano and Boguna, though very good to describe the architecture of the relations among composites and primes, can not be useful to catch the most subtle properties of prime numbers. Anyway, the path suggested by such model is very promising, and should drive researchers to look for more refined algorithms to simulate the structure of integer numbers.

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How I Rewired My Brain to Become Fluent in Math

How I Rewired My Brain to Become Fluent in Math | Bounded Rationality and Beyond | Scoop.it

I was a wayward kid who grew up on the literary side of life, treating math and science as if they were pustules from the plague. So it’s a little strange how I’ve ended up now—someone who dances daily with triple integrals, Fourier transforms, and that crown jewel of mathematics, Euler’s equation. It’s hard to believe I’ve flipped from a virtually congenital math-phobe to a professor of engineering.

One day, one of my students asked me how I did it—how I changed my brain. I wanted to answer Hell—with lots of difficulty! After all, I’d flunked my way through elementary, middle, and high school math and science. In fact, I didn’t start studying remedial math until I left the Army at age 26. If there were a textbook example of the potential for adult neural plasticity, I’d be Exhibit A.

 

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Dr. Lisa Kramer - Expert in Behavioural Finance & Neuroeconomics

Stirring up controversy in financial circles for over a decade with her seminal contributions bridging the gap between rational finance and behavioural finance, Dr. Lisa Kramer is no stranger to the dynamic marketplace of ideas. An expert on behavioural finance, investments, capital market seasonality, behavioral economics, neuroeconomics, and personal finance, Dr. Kramer captivates audiences with her real-time demonstrations of human biases. Participants come away with a deeper understanding of recent, state-of-the-art developments in the exciting field of behavioural finance.

Dr. Kramer’s research has been profiled in The Wall Street Journal, US News and World Reports, The Washington Post, The Daily Telegraph, Business Week, Fast Company, The National Post, The Globe and Mail, and on CBC Television and Radio.

She received her PhD in finance from the Sauder School of Business at the University of British Columbia and is an Associate Professor of Finance at the University of Toronto. She has also held the Canadian Securities Institute Research Foundation Term Professorship, and spent a sabbatical as a visiting scholar in the Psychology Department at Stanford University where she conducted ground-breaking research.

http://www.speakers.ca/speakers/dr-li...

This video is brought to you by Speaker's Spotlight - http://www.speakers.ca - Canada's leading speakers' bureau.
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Tiny Lights Could Illuminate Brain Activity

Tiny Lights Could Illuminate Brain Activity | Bounded Rationality and Beyond | Scoop.it
Alessandro Cerboni's insight:

Step aside, huge magnets and radioactive tracers—soon some brain activity will be revealed by simply training dozens of red lights on the scalp. A new study in Nature Photonics finds this optical technique can replicate functional MRI experiments, and it is more comfortable, more portable and less expensive.

The method is an enhancement of diffuse optical tomography (DOT), in which a device shines tiny points of red light at a subject's scalp and analyzes the light that bounces back. The red light reflects off red hemoglobin in the blood but does not interact as much with tissues of other colors, which allows researchers to recover an fMRI-like image of changing blood flow in the brain at work. For years researchers attempting to use DOT have been limited by the difficulty of packing many heavy light sources and detectors into the small area around the head. They also needed better techniques for analyzing the flood of data that the detectors collected.

 
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Un modo antico per guarire la mente Finds New sostegno scientifico - PsyBlog

Un modo antico per guarire la mente Finds New sostegno scientifico - PsyBlog | Bounded Rationality and Beyond | Scoop.it
The benefits were particularly strong for those who were stressed. 

Prendendo gruppo passeggiate nella natura è associata con una migliore benessere mentale e ridurre lo stress e la depressione, un nuovo studio su larga scala trova.

Lo studio è uno dei primi a dimostrare che semplicemente camminando nella natura non si limita a beneficio del corpo, ma anche la mente.


Alessandro Cerboni's insight:

who knows if it not be better to hold meetings while walking to function better the mind, should force the governed to walk for hours to be able to decide better!

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Stagflation and the Rejection of Keynesian Economics: A Case of Naive Falsification

Stagflation and the Rejection of Keynesian Economics: A Case of Naive Falsification | Bounded Rationality and Beyond | Scoop.it
Abstract

 

In this paper I employ Imre Lakatos's methodology of scientific research programs to scrutinize the idea that stagflation in the 1970s falsified the Keynesian research program. I point out that Keynesian models were able to account for stagflation once they included inflation expectations, so the essential tenets of the Keynesian research program are consistent with the would-be anomaly of stagflation. Furthermore, Keynesian economics exhibited both theoretical and empirical progress by evolving in a way that rendered stagflation a logical consequence of Keynesian assumptions. The transition to new classical economics did not yield such progress. Also, as Keynesian economics tends to adopt novel findings and research methods, new classical economics does not have excess theoretical or empirical content relative to the Keynesian research program. In summary, I find that the falsification of the Keynesian program is unwarranted.

 

 

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Optimal time-consistent fiscal policy in an endogenous growth economy with public consumption and capital

Abstract

In an endogenous growth model where the fiscal authority cannot commit to policy decisions beyond the current period, we explore the time-consistent optimal choice for two policy instruments: the income tax rate and the split of government spending between utility bearing consumption and productive services to firms. We show that under the time-consistent Markov policy the economy lacks any transitional dynamics and there is local and global determinacy of equilibrium. For empirically plausible parameter values we find that the Markov-perfect policy implies a higher tax rate and a larger proportion of government spending allocated to consumption than those chosen under a commitment constraint. As a result, economic growth is slightly lower under the Markov-perfect policy than under the Ramsey policy, with growth under lump-sum taxes being highest. The implication of our results is that if the private sector is aware of the government’s inability to pledge future policy decisions, then the government should impose a slightly higher tax rate and devote a higher share of public resources to consumption, with a relatively low cost in terms of growth.

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Your brain on improv

Your brain on improv | Bounded Rationality and Beyond | Scoop.it
Musician and researcher Charles Limb wondered how the brain works during musical improvisation -- so he put jazz musicians and rappers in an fMRI to find out. What he and his team found has deep implications for our understanding of creativity of all kinds.
(Filmed at TEDxMidAtlantic.)
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Preliminary evidence for reduced cortical activity in experienced guitarists during performance preparation for simple scale playing

 ABSTRACT: Research using neuroscientific techniques has shown that less cortical activity occurs in the brains of experienced musicians and athletes than in the brains of novices when they plan and prepare to perform a motor skill. We used electroencephalography to observe cortical activity in the brains of experienced and novice guitarists preparing to play a scale on the guitar. The results, presented in this research note, confirm the findings of previous research and suggest that the motor preparation of experts is more efficient than that of novices. Cortical activity in music students could therefore, if tracked longitudinally, provide an objective marker of musical skill learning and be used to inform music learning, teaching and assessment practices. 

KEY WORDS: Electroencephalography, movement-related cortical potential, motor skills, skill learning, guitar 

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Recent advances in understanding neural systems that support inhibitory control

Recent advances in understanding neural systems that support inhibitory control | Bounded Rationality and Beyond | Scoop.it
Highlights•

Right lateral prefrontal cortex plays an important role in inhibitory control.•

Recent advances suggest that rIFG may not just be involved in motoric inhibition.

Rather rIFG may integrate contextual information with potential goals.

Whether inhibitory control uses a central neural system remains unclear.

Alternatively, such systems may vary by domain — motoric, cognitive, emotional.

 Although it is agreed that the right lateral prefrontal cortex plays a prominent role in inhibitory control, the exact psychological processes it implements remain unclear, as do the precise neural substrates of such control. Recently debated is the issue of whether the right inferior cortex is specifically involved in inhibition of action, or whether this region monitors the environmental context to provide information as to which goals are attainable under current conditions. Another issue of debate is whether there is a common neural substrate for inhibitory control or whether different neural systems are involved in inhibitory control in different domains — motoric, cognitive, and emotional. The present review examines the current state of thought on these two important issues.

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From Tribulations to Appreciation Experiencing Adversity in the Pas Predicts Greater Savoring in the Present

Alessandro Cerboni's insight:

Abstract
Can experiencing adversity enhance people’s appreciation for life’s small pleasures? To examine this question, we asked nearly
15,000 adults to complete a vignette-based measure of savoring. In addition, we presented participants with a checklist of adverse events (e.g., divorce, death of a loved one) and asked them to indicate whether they had experienced any of these events and, if so, to specify whether they felt they had emotionally dealt with the negative event or were still struggling with it. Although people who were currently struggling with adversity reported a diminished proclivity for savoring positive events, individuals who had dealt with more adversity in the past reported an elevated capacity for savoring. Thus, the worst experiences in life may come with an eventual upside, by promoting the ability to appreciate life’s small pleasures

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5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives | Zero Hedge

5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives | Zero Hedge | Bounded Rationality and Beyond | Scoop.it
When is the U.S. banking system going to crash? We can sum it up in three words. Watch the derivatives. It used to be only four, but now there are five "too big to fail" banks in the United States that each have more than 40 trillion dollars in exposure to derivatives. 

The "too big to fail" banks run up enormous profits from their derivatives trading.  According to the New York Times, U.S. banks "have nearly $280 trillion of derivatives on their books" even though the financial crisis of 2008 demonstrated how dangerous they could be...

American banks have nearly $280 trillion of derivatives on their books, and they earn some of their biggest profits from trading in them. But the 2008 crisis revealed how flaws in the market had allowed for dangerous buildups of risk at large Wall Street firms and worsened the run on the banking system.

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Eli Levine's curator insight, September 26, 11:59 AM

Living was fun while it lasted.  I suppose now it's going to come down to fighting and dying.

 

Idiots....

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ADHD: Brains not recognizing an angry expression | neuroscientistnews.com

ADHD: Brains not recognizing an angry expression | neuroscientistnews.com | Bounded Rationality and Beyond | Scoop.it
Inattention, hyperactivity, and impulsive behavior in children with ADHD can result in social problems and they tend to be excluded from peer activities. They have been found to have impaired recognition of emotional expression from other faces. The research group of Professor Ryusuke Kakigi of the National Institute for Physiological Sciences, National Institutes of Natural Sciences, in collaboration with Professor Masami K. Yamaguchi and Assistant Professor Hiroko Ichikawa of Chuo University first identified the characteristics of facial expression recognition of children with ADHD by measuring hemodynamic response in the brain and showed the possibility that the neural basis for the recognition of facial expression is different from that of typically developing children. - See more at: http://www.neuroscientistnews.com/research-news/adhd-brains-not-recognizing-angry-expression#sthash.W9ftKlj0.dpuf
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