Topic
Corner solution
About: Corner solution is a research topic. Over the lifetime, 197 publications have been published within this topic receiving 4941 citations.
Papers published on a yearly basis
Papers
Journal Article•
TL;DR: Ariely et al. as discussed by the authors found that environmental cues, shortsightedness, peer pressure and other forms of "irrationality" significantly influences the decision-making process and behavior in general.
Abstract: Predictably Irrational: The Hidden Forces That Shape Our Decisions Dan Ariley HarperCollins 2008 Every day, one makes decisions that, we hope, are the right ones, whether to buy the expensive brand-name or the inexpensive generic, whether or not to approach the person at the end of the bar for a date, or whether to apply the brake or floor the accelerator in order to beat the red light. "Rational" decision making could be described as the selection of the optimal or best option based on reflection of all pertinent information. However, Predictably Irrational suggests that environmental cues, shortsightedness, peerpressure and other forms of "irrationality" significantly influences the decision-making process and behavior in general. Once it is recognized that irrational "factors" impedes effective decision-making, one can limit the influence of extraneous factors and arrive at better decisions. Although one would like to believe important decisions are made based solely on reason, Ariely observes that this is often not the case. Despite our advanced cerebral cortex, the seat of reasoning, activity from the evolutionarily primitive portion of the brain, the limbic system, frequently overrides the cerebral cortex. For example, in the "cold," rational state, teenagers will pledge to their parents to follow the rules of the road while driving. However, the "hot" state, the emotionally charged state induced by a group of boisterous friends as passengers, overrides cortical control. Thus, likelihood of a teen driver with another teen as a passenger getting into an accident is double of that of a lone teen driver. Another teen passenger further increases the risk of an accident. Ariely suggests using already available automotive technology to reduce teenaged drivers from the "hot" state to the "cold". For example, via an OnStar-like device that instantly alerts parents when the car goes over a preset speed and automatically decelerates. A similar preset "breaking" system could be applied to credit cards. The key is that controls are in place during the rational "cold" state such that they are activated during the "hot" state, when we have little self-control or forgot our long-term goals. One could imaging the burden imposed on those with little inhibition and self-control to begin with. Procrastination also comes under scrutiny as an irrational "factor". When one is "too busy doing nothing" instead of completing an important task, one has wasted time that will never return. ("Multitasking" could be considered a form of procrastination, since concerted effort is not spent on the primary task and overall performance suffers.) In general, modern humans have found it easy to sacrifice long-term goals for immediate gratification. This is in contrast to primitive human life, where self-gratification and disregarding strategic planning in a temperate climate has fatal consequences. Thanks to the influence of the mass media, long-term goals, such as building a retirement nest egg or saving for an expensive purchase, can be quickly abandoned and savings squandered by those who are prone to immediate gratification. In the modern welfare state, the responsible end up covering for the irresponsible. One of Ariely's experiments demonstrated that the best (academic) performance can be expected if clear, fixed guidelines are in place, rather than allowing others to set their own guidelines or having no guidelines. The result of this experiment, performed on Ariely's MIT students, suggests the need for social control, irrespective of one's feelings on personal "freedom". If rigid guidelines were necessary to coax top performance from MIT students, then authoritarianism would be even more necessary for those who are much lower than MIT students in terms of motivation and intelligence. Naturally, there will be those who believe in social equality and will balk at this idea. Social equality, however, has not and will not obliterate biological inequality. …
1,270 citations
TL;DR: In this article, a representation theorem is given which rationalizes individual choice behavior as being as if the individual is "uncertain about future tastes" and the choice is made in more than one stage, where these early choices amount to choice of a subset of items from which subsequent choice will be made.
Abstract: This paper concerns individual choice among "opportunity sets," from which the individual will later choose a single object. In particular, it concerns preference relations on opportunity sets which satisfy "preference for flexibility," a set is at least as good as all of its subsets, but which may not satisfy "revealed preference," the union of two sets may be strictly preferred to each one taken separately. A representation theorem is given which "rationalizes" such choice behavior as being as if the individual is "uncertain about future tastes." IN MANY PROBLEMS of individual choice, the choice is made in more than one stage. At early stages, the individual makes decisions which will constrain the choices that are feasible later. In effect, these early choices amount to choice of a subset of items from which subsequent choice will be made. This paper concerns choice among such opportunity sets, where the individual has a "desire for flexibility" which is "irrational" if the individual knows what his subsequent preferences will be.
811 citations
Book•
17 Mar 2003
TL;DR: Metagames are those "derived from a given game by allowing one of the players to choose his strategy (in the given game) after the others in knowledge of their choices" as discussed by the authors.
Abstract: Since the theory of metagames is a thoroughly new development, built up from "classical" game theory, the author has taken great care to assess the soundness of its structural parts, proving all assertions and evoking a high degree of mathematical rigor and generality akin to that found in abstract set theory in pure mathematics. However, the aim of his work is to produce a technique that can be used to resolve real-life, real-time conflict situations and to investigate political and social interactions between decision makers. Such applications have in fact already been made, and the book contains, for example, an analysis of the Vietnam conflict.The most primitive ideas of game theory - the extensive and normal forms, and the equilibrium point - are developed in such a way as to create a theory that is not purely formal and is in no way normative but rather is realistic, empirical, and experimental. Moreover, the approach is "nonquantitative". One reason is that numerical utilities usually cannot be estimated in a reliable manner in the real world. Another is that some of the most powerful methods developed by twentieth-century mathematics (those, for example, in topology, modern algebra, and set theory) are nonquantitative, and their application to social science, with its many "unmeasurables," is clearly appropriate and potentially of enormous value.Other features of the approach are that it embraces both cooperative and noncooperative games simultaneously; it embraces both pure-strategy and mixed-strategy games; and it engages generally in "n-person", variable-sum games, of which the common two-person, zero-sum game is only a special case.Metagames are those "derived from a given game by allowing one of the players to choose his strategy (in the given game) after the others in knowledge of their choices." The theory has important comsequences regarding the nature of rational behavior, which is defined here as choosing alternatives that are most likely to achieve a given end. Indeed, the author proves several theorems that assert that in some cases to be rational is to be wrong, that irrationality is sometimes more effective, and, even, "that to be rational in two-person games is usually to be a sucker." He identifies three separate breakdowns of rationality. A consideration of "metarationality" leads to similar conclusions at that higher level of decision making.Of special interest are the sections on the existentialist axiom, the free will argument, and the axiom of choce, and the paradoxes implicit in the use of these concepts.Models based on metagame theory have been tentatively developed elsewhere to deal with urban transportation priorities, the New York school strike, and the Arab-Israeli conflict, as well as the Vietnam struggle.
535 citations
Posted Content•
TL;DR: In this paper, the authors present an experiment on voluntary contributions to a public good, where the game has a dominant strategy solution in the interior of the strategy space, and they observe significant over-contribution.
Abstract: We present an experiment on voluntary contributions to a public good. The game has a dominant strategy solution in the interior of the strategy space. In the experiment we observe significant over-contribution. This result is similar to those of the typical corner solution experiments.
179 citations
TL;DR: The Ellsberg paradox illustrates that some other form of uncertainty can indeed exist, and the main idea of fuzzy set theory is to propose a model of uncertainty different from that given by probability, precisely because a different form of uncertainties is being modeled.
Abstract: Introduction In 1961, Ellsberg presented the following paradox. An experiment was designed with two urns, each containing 100 balls, of which the first one was known to contain 50 red balls and 50 black balls, while no further information was given about the contents of the other urn. If asked to bet on the color of a ball drawn from one of the urns, most people were found indifferent as to which color they would choose no matter whether the ball was drawn from the first or the second urn. On the other hand, Ellsberg found that if people were asked which urn they would prefer to use for betting on either color, they consistently favored the first urn (no matter what color they were asked to bet on). What seems to be present in this experiment is the participants' perception of uncertainty. When we say "uncertainty," the usual association is with "probability." The Ellsberg paradox illustrates that some other form of uncertainty can indeed exist. Probability theory provides no basis for the outcome of the Ellsberg experiment. Klir and Folger (1988) analyze the semantic context of the term "uncertain" and arrive at the conclusion that there are two main types of uncertainty, captured by the terms "vagueness" and "ambiguity." Vagueness is associated with the difficulty of making sharp or precise distinctions among objects. "Ambiguity" is caused by situations where the choice between two or more alternatives is unspecified. The basic set of axioms of probability theory originating from Kolmogorov, rests on the assumption that the outcome of a random event can be observed and identified with precision. Any vagueness of observation is considered negligible, or not significant to the construction of the theoretical model. Yet one cannot escape the conclusion that forms of uncertainty represented by vagueness of observations, human perceptions, and interpretations, are missing from probabilistic models, which equate uncertainty with randomness (i.e., a sophisticated version of ambiguity). Several reasons may exist for wanting to search for models of a form of uncertainty other than randomness. One is that vagueness is unavoidable. Given imprecision of natural language, or human perception of the phenomena observed, vagueness becomes a major factor in any attempt to model or predict the course of events. But there is more. When the phenomena observed become so complex that exact measurement involving all features considered significant would be impossible, or longer than economically feasible for study, mathematical precision is often abandoned in favor of more workable simple, but vague, "common sense" models. Thus, complexity of the problem may be another cause of vagueness. These reasons were the driving force behind the development of the fuzzy set theory (FST). This field of applied mathematics has become a dynamic research and applications field, with success stories ranging from a fuzzy logic rice cooker to an artificial intelligence in control of Japan's Sendai subway system. The main idea of fuzzy set theory is to propose a model of uncertainty different from that given by probability, precisely because a different form of uncertainty is being modeled. Fuzzy set theory was created in Zadeh's (1965) historic article. To present this basic idea, recall that a characteristic function of a subset E of a universe of discourse U is defined as [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] In other words, the characteristic function describes the membership of an element X in a set E. It equals one if X is a member of E, and zero otherwise. Zadeh challenged the idea that membership in all sets behaves in the manner described above. One example would be the set of "tall people." We consistently talk about the set of "tall people," yet understand that the concept used is not precise. A person who is 5'11" is tall only to a certain degree, and yet such a person is not "not tall. …
146 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2021 | 2 |
| 2020 | 5 |
| 2019 | 6 |
| 2018 | 1 |
| 2017 | 2 |
| 2016 | 7 |