The Effect of Information Constraints on Decision Making and Economic Behaviour

Location: C60
Date(s): Tuesday 19th May 2009 (16:00-17:00)
Contact: Natasha Alechina
Description: Speaker: Roman Belavkin, University of Middlesex

Abstract:

Economic theory is based on the idea of rational agents acting according to their preferences. Mathematically, this is represented by maximisation of some utility or the expected utility function, if choices are made under uncertainty. Although this formalism has become dominant in optimisation, game theories and even AI, there is a degree of scepticism about the expected utility representation, especially among behavioural economists who often use paradoxical counter-examples dating back as far as Aristotle. I will try to convince you that many of these paradoxes can be avoided if the problem is treated from a learning theory point of view, where information constraints are explicitly taken into account. I will use methods of functional and convex analyses to demonstrate geometric interpretation of the solution of an abstract optimal learning problem, and demonstrate how this solution explains the mismatch between the normative and behavioural theories of decision-making.

Roman Belavkin was a PhD student here some time ago, defended his thesis on cognitive modelling/AI, and now works at the University of Middlesex.

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