Economic Theory

Economics and Cognitive Science by Bernard Walliser

By Bernard Walliser

Economics, facing psychological approaches of choice makers is a part of cognitive technology; conversely, cognitive technological know-how, confronted with constraints on details processing, is a part of economics. In July 1990, the Cecoia 2 convention used to be organised in Paris to extra discover the connections among the 2. The papers provided during this quantity illustrate this really interdisciplinary learn intertwining social and cognitive sciences. 3 major subject matters are represented: agent's psychological illustration while dealing with complicated uncertainty; agent's computational constraints resulting in bounded rationality; agent's studying and evolution in an imperfectly recognized setting

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It exists then a function f which distorts the cumulative probabilities on the outcomes (or the worlds) in the following sense: . f is increasing . f(0) = 0 and f(l) = 1 Finally, the preference relation can be represented by the following evaluation function (called "anticipated utility"): Belief revision and decision under complex V ( f i ) = k (Jl f = Σ r i ( x { fί £ k = g P x f i (l=l } υ ) χ χ J r (u(xk) = Σ [f(Pr(E k)j 31 ( ( *)-^ χ-ι>> Pr. (χ, )) - f 1 1 (P (Ei>) uncertainty fk-1 Σ Ργα( Χ ι ) }u(xk ) 1 = 1 - u(xk +1 ) ) - f ( P r ( E k.

80. 75. 80, most of them choose resource # 2 . The only thing that prevents all of the agents from piling up at resource # 2 is the fact that there is some uncertainty in their decision-probability functions. The problem with the system analysts is that they have no mechanism for adjusting their assumptions about the nature of the other agents in the system. They blissfully continue to make grossly incorrect predictions even when there is strong evidence to the contrary. ADAPTIVE SYSTEM ANALYSTS Technical analysts are responsive to the behavior of the system, but suffer from an inability to take into account the strategies of other agents.

F(0) = 0 and f(l) = 1 Finally, the preference relation can be represented by the following evaluation function (called "anticipated utility"): Belief revision and decision under complex V ( f i ) = k (Jl f = Σ r i ( x { fί £ k = g P x f i (l=l } υ ) χ χ J r (u(xk) = Σ [f(Pr(E k)j 31 ( ( *)-^ χ-ι>> Pr. (χ, )) - f 1 1 (P (Ei>) uncertainty fk-1 Σ Ργα( Χ ι ) }u(xk ) 1 = 1 - u(xk +1 ) ) - f ( P r ( E k. 1) ) ] u ( x k ) The anticipated utility function is similar to the Choquet expected utility function except that the uncertainty is defined on outcomes rather than worlds and that the capacities are replaced by distorted probabilities.

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