On the origin of utility, weighting, and discounting functions: How they get their shapes and how to change their shapes

We present a theoretical account of the origin of the shapes of utility, probability weighting, and temporal discounting functions. In an experimental test of the theory, we systematically change the shape of revealed utility, weighting, and discounting functions by manipulating the distribution of monies, probabilities, and delays in the choices used to elicit them. The data demonstrate that there is no stable mapping between attribute values and their subjective equivalents. Expected and discounted utility theories, and also their descendants such as prospect theory and hyperbolic discounting theory, simply assert stable mappings to describe choice data and offer no account of the instability we find. We explain where the shape of the mapping comes from and, in describing the mechanism by which people choose, explain why the shape depends on the distribution of gains, losses, risks, and delays in the environment

Nash bargaining in ordinal environments

We analyze the implications of Nash’s (1950) axioms in ordinal bargaining environments; there, the scale invariance axiom needs to be strenghtened to take into account all order-preserving transformations of the agents’ utilities. This axiom, called ordinal invariance, is a very demanding one. For two-agents, it is violated by every strongly individually rational bargaining rule. In general, no ordinally invariant bargaining rule satisfies the other three axioms of Nash. Parallel to Roth (1977), we introduce a weaker independence of irrelevant alternatives axiom that we argue is better suited for ordinally invariant bargaining rules. We show that the three-agent Shapley-Shubik bargaining rule uniquely satisfies ordinal invariance, Pareto optimality, symmetry, and this weaker independence of irrelevant alternatives axiom. We also analyze the implications of other independence axioms

Assortment optimisation under a general discrete choice model: A tight analysis of revenue-ordered assortments

The assortment problem in revenue management is the problem of deciding which subset of products to offer to consumers in order to maximise revenue. A simple and natural strategy is to select the best assortment out of all those that are constructed by fixing a threshold revenue $\pi$ and then choosing all products with revenue at least $\pi$. This is known as the revenue-ordered assortments strategy. In this paper we study the approximation guarantees provided by revenue-ordered assortments when customers are rational in the following sense: the probability of selecting a specific product from the set being offered cannot increase if the set is enlarged. This rationality assumption, known as regularity, is satisfied by almost all discrete choice models considered in the revenue management and choice theory literature, and in particular by random utility models. The bounds we obtain are tight and improve on recent results in that direction, such as for the Mixed Multinomial Logit model by Rusmevichientong et al. (2014). An appealing feature of our analysis is its simplicity, as it relies only on the regularity condition. We also draw a connection between assortment optimisation and two pricing problems called unit demand envy-free pricing and Stackelberg minimum spanning tree: These problems can be restated as assortment problems under discrete choice models satisfying the regularity condition, and moreover revenue-ordered assortments correspond then to the well-studied uniform pricing heuristic. When specialised to that setting, the general bounds we establish for revenue-ordered assortments match and unify the best known results on uniform pricing.Comment: Minor changes following referees' comment

Decision for reconstructive interventions of the upper limb in individuals with tetraplegia: the effect of treatment characteristics

Objective: To determine the effect of treatment characteristics on the\ud decision for reconstructive interventions for the upper extremities (UE) in\ud subjects with tetraplegia. - \ud Setting: Seven specialized spinal cord injury centres in the Netherlands. - \ud Method: Treatment characteristics for UE reconstructive interventions were\ud determined. Conjoint analysis (CA) was used to determine the contribution\ud and the relative importance of the treatment characteristics on the decision\ud for therapy. Therefore, a number of different treatment scenarios using these\ud characteristics were established. Different pairs of scenarios were presented\ud to subjects who were asked to choose the preferred scenario of each set. - \ud Results: forty nine subjects with tetraplegia with a stable C5, C6 or C7\ud lesion were selected. All treatment characteristics significantly influenced\ud the choice for treatment. Relative importance of treatment characteristics\ud were: intervention type (surgery or surgery with FES implant) 13%, number\ud of operations 15%, in patient rehabilitation period 22%, ambulant\ud rehabilitation period 9%, complication rate 15%, improvement of elbow\ud function 10%, improvement of hand function 15%. In deciding for therapy\ud 40% of the subjects focused on one characteristic. - \ud Conclusion: CA is applicable in Spinal Cord Injury medicine to study the\ud effect of health outcomes and non-health outcomes on the decision for\ud treatment. Non-health outcomes which relate to the intensity of treatment\ud are equally important or even more important than functional outcome in the\ud decision for reconstructive UE surgery in subjects with tetraplegia

Clustering and the hyperbolic geometry of complex networks

Clustering is a fundamental property of complex networks and it is the mathematical expression of a ubiquitous phenomenon that arises in various types of self-organized networks such as biological networks, computer networks or social networks. In this paper, we consider what is called the global clustering coefficient of random graphs on the hyperbolic plane. This model of random graphs was proposed recently by Krioukov et al. as a mathematical model of complex networks, under the fundamental assumption that hyperbolic geometry underlies the structure of these networks. We give a rigorous analysis of clustering and characterize the global clustering coefficient in terms of the parameters of the model. We show how the global clustering coefficient can be tuned by these parameters and we give an explicit formula for this function.Comment: 51 pages, 1 figur

Using item response theory to explore the psychometric properties of extended matching questions examination in undergraduate medical education

BACKGROUND: As assessment has been shown to direct learning, it is critical that the examinations developed to test clinical competence in medical undergraduates are valid and reliable. The use of extended matching questions (EMQ) has been advocated to overcome some of the criticisms of using multiple-choice questions to test factual and applied knowledge. METHODS: We analysed the results from the Extended Matching Questions Examination taken by 4th year undergraduate medical students in the academic year 2001 to 2002. Rasch analysis was used to examine whether the set of questions used in the examination mapped on to a unidimensional scale, the degree of difficulty of questions within and between the various medical and surgical specialties and the pattern of responses within individual questions to assess the impact of the distractor options. RESULTS: Analysis of a subset of items and of the full examination demonstrated internal construct validity and the absence of bias on the majority of questions. Three main patterns of response selection were identified. CONCLUSION: Modern psychometric methods based upon the work of Rasch provide a useful approach to the calibration and analysis of EMQ undergraduate medical assessments. The approach allows for a formal test of the unidimensionality of the questions and thus the validity of the summed score. Given the metric calibration which follows fit to the model, it also allows for the establishment of items banks to facilitate continuity and equity in exam standards

Evaluating a model of global psychophysical judgments for brightness: II. Behavioral properties linking summations and productions

Steingrimsson (Attention, Perception, & Psychophysics, 71, 1916–1930, 2009) outlined Luce’s (Psychological Review, 109, 520–532 2002, 111, 446–454 2004) proposed psychophysical theory and tested, for brightness, behavioral properties that, separately, gave rise to two psychophysical functions, Ψ⊕ and \documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$${\Psi_{{ \circ_p}}}$$\end{document}. The function Ψ⊕ maps pairs of physical intensities onto positive real numbers and represents subjective summation, and the function \documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$${\Psi_{{ \circ_p}}}$$\end{document} represents a form of ratio production. This article, the second in a series expected to consist of three articles, tests the properties linking summation and production such that it forces \documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$${\Psi_{{ \circ_p}}} = {\Psi_\oplus } = \Psi$$\end{document}. The properties tested are a form of distributivity and, in three experiments, were subjected to an empirical evaluation. Considerable support is provided for the existence of a single function Ψ for both summation and ratio production. The scope of this series of articles is to establish the theory as a descriptive model of binocular brightness perception

The UN in the lab

We consider two alternatives to inaction for governments combating terrorism, which we term Defense and Prevention. Defense consists of investing in resources that reduce the impact of an attack, and generates a negative externality to other governments, making their countries a more attractive objective for terrorists. In contrast, Prevention, which consists of investing in resources that reduce the ability of the terrorist organization to mount an attack, creates a positive externality by reducing the overall threat of terrorism for all. This interaction is captured using a simple 3×3 “Nested Prisoner’s Dilemma” game, with a single Nash equilibrium where both countries choose Defense. Due to the structure of this interaction, countries can benefit from coordination of policy choices, and international institutions (such as the UN) can be utilized to facilitate coordination by implementing agreements to share the burden of Prevention. We introduce an institution that implements a burden-sharing policy for Prevention, and investigate experimentally whether subjects coordinate on a cooperative strategy more frequently under different levels of cost sharing. In all treatments, burden sharing leaves the Prisoner’s Dilemma structure and Nash equilibrium of the game unchanged. We compare three levels of burden sharing to a baseline in a between-subjects design, and find that burden sharing generates a non-linear effect on the choice of the efficient Prevention strategy and overall performance. Only an institution supporting a high level of mandatory burden sharing generates a significant improvement in the use of the Prevention strategy

Interdependence, interaction, and relationships

Interdependence theory presents a logical analysis of the structure of interpersonal situations, offering a conceptual framework in which interdependence situations can be analyzed in terms of six dimensions. Specific situations present specific problems and opportunities, logically implying the relevance of specific motives and permitting their expression. Via the concept of transformation, the theory explains how interaction is shaped by broader considerations such as long-term goals and concern for a partner's welfare. The theory illuminates our understanding of social-cognitive processes that are of longstanding interest to psychologists such as cognition and affect, attribution, and self-presentation. The theory also explains adaptation to repeatedly encountered interdependence patterns, as well as the embodiment of such adaptations in interpersonal dispositions, relationship-specific motives, and social norms