Resolution Of Uncertainty Research Articles

Provocation of verbal interaction of dolphins via a hydro-acoustic channel on the basis of cognitive empathy

The provocation of the hydroacoustic communication interaction of Tursiops truncatus dolphins based on cognitive empathy showed that they use packets of ultrashort pulses (USPs) in the process of “dialogue”. The duration of bursts varies from 40 ms to 3000 ms with modulation of the interval between USPs from ~1 to ~120 ms and pauses between bursts. The interval modulation pattern is structured using various modulation laws. The communication signals were obtained in an experiment with theparticipation of three animals, who knew the main task of sequential acoustic differentiation of two objective stimuli. The impetus for hydroacoustic interaction is the resolution of uncertainty when teaching the respondent the inverse differentiation problem. This generates emotional empathy in observers and provokes vocalization between individuals. The advantages and disadvantages of methodological methods of provoking hydroacoustic interaction are considered in detail, starting the process of cognitive empathy. In the method under consideration, echolocation and communication signals are spaced apart in time and space, which allows them to be uniquely identified.

Valuating the capital structure under incomplete information

Can higher uncertainty increase the valuation (market-to-book value) of young firms compared to more established ones? As the current market shows higher levels of uncertainty about companies’ expected cash flows and changes in firm value, the question of the fundamental convex relationship between the two becomes more relevant. This paper aims to study how cash flow uncertainty affects the capital structure/leverage of a firm over time. A simple Bayesian learning framework is employed to assess leverage ratios in the presence of parameter uncertainty about expected cash flow. This study provides an analytical solution for leverage as a function of firm age and explores the implications using numerical results. The model links market leverage with expected cash flow volatility and firm age. Young firms face uncertainty about their expected cash flows and hence their firm value. Managers continuously update their evaluation of leverage ratios when they observe realized cash flow until firms reach maturity. Therefore, the paper provides a novel explanation of why the leverage ratio for many start-ups increases over time: the resolution of uncertainty decreases upside shock expectations as the firm ages. This result is useful both for academics, who can test the formulas derived in this paper for various industries, countries, and conditions, and for practitioners, who can use them to calibrate algorithmic trading models when linking uncertainty and firm valuation.

Rationing rules for risky claims

We study rationing rules in a scenario where individuals have state-contingent claims over a resource. The rules must allocate shares before the resolution of uncertainty. We begin by characterizing ex-ante rules based on how they handle the inherent uncertainty in individual claims. The key axiom is “No Penalty for Risk”, which states that the rule should not penalize an individual if a situation differs from another only in terms of the presence of risk in the former situation compared to the latter situation’s riskless claim. Regarding ex-post characterizations, our primary axiom is “Indifference to Independent Combination of Gambles”. If an individual has risk-neutral expected utility preferences, any rule that makes them indifferent between a given rationing problem and a corresponding independent combination of gambles between a degenerate gamble and a zero game (any rationing problem with a zero endowment) must be in the ex-post form. Lastly, we provide a partial comparative static result that supports the claim that individuals generally prefer ex-ante rules to ex-post rules when the resource level is low enough.

Event-related Potentials Corresponding to Decision-making Under Uncertain Conditions.

Decision-making is essential to human functioning, and resolving uncertainty is an essential part of decision-making. Impaired decision-making is present in many pathological conditions, and identifying markers of decision-making under uncertainty will provide a measure of clinical impact in future studies of therapeutic intervention for impaired decision-making. To describe EEG event-related potentials (ERPs) correlating with decision-making under uncertain conditions when compared with certain conditions. We used a novel card-matching task based on the Wisconsin Card Sorting Test to describe the neural correlates of uncertainty, as measured by EEG, in a group of 27 neurotypical individuals. We evaluated 500-ms intervals in the 2 seconds after card presentation to identify ERPs that are associated with maximal uncertainty compared with maximal certainty. After correcting for multiple comparisons, we identified an ERP in the 500-1000-ms time frame (certain > uncertain, max amplitude 12.73 µV, latency 914 ms) in the left posterior inferior region of the scalp. We also found a P300-like ERP in the left frontal and parietal regions in the 0-500-ms time frame when the individuals received correct versus incorrect feedback (incorrect feedback > correct feedback, max amplitude 1.625 µV, latency 339 ms). We identified an ERP in the 500-1000-ms time frame (certain > uncertain) that may reflect the resolution of uncertainty, as well as a P300-like ERP when feedback is presented (incorrect feedback > correct feedback). These findings can be used in future studies to improve decision-making and resolve uncertainty on the described markers.

Statistic and Probabilistic thinking, a bridge between neuroscience and artificial intelligence

What is the epicenter of this article? It is the human brain, in which the essential, the dispensable and the valuable in all sensescome together, where the seeds of ideas, developments and solutions are born, with preeminence in the resolution of conflicts,many times with complex characteristics, reason by which the brain maps, through thought, labeled with different names, basic andnot so basic theories of uncertainty resolution; considering Stochastics as a wide-ranging discipline that is reflected in brainfunctioning. In this review, central disciplines converge such as: Biology, Neurosciences, currents of Thought based on Uncertaintyand Artificial Intelligence in the simulation of learning processes, through bio-inspired models such as: Neural Networks, MachineLearning, Deep Learning, Learning by Reinforcement, Agent and Multiagent Theory, Applied Mathematics and UncertaintyResolution Theories. The purpose is conflict resolution, based on Complex Thought, with a multi-methodological approach, sincethere are interdisciplinary situations that require transdisciplinary solutions. The different conceptions of the Brain, in the posingand solving of problems with the presence of uncertainty, in order to improve intelligent decision making.

The effect of macroeconomic news announcements on the implied volatility of commodities: The role of survey releases

AbstractWe examine the response of the implied volatility in crude oil, gold, and silver commodity markets to macroeconomic news announcements. We find that macroeconomic releases reduce uncertainty in commodity markets consistent with the hypothesis of uncertainty resolution following scheduled news announcements, while macroeconomic releases from the category of survey news announcements increase it. This result can be explained by the qualitative nature of these surveys and their ability to provide information in advance of major official macroeconomic indicators. Nevertheless, we show that survey news announcements can also be useful in resolving commodity market uncertainty in periods of heightened global financial turmoil and when the manufacturing sector of the largest economies is in contraction.

Risk in Time: The Intertwined Nature of Risk Taking and Time Discounting

Abstract Standard economic models view risk taking and time discounting as two independent dimensions of decision making. However, mounting experimental evidence demonstrates striking parallels in patterns of risk taking and time discounting behavior and systematic interaction effects, which suggests that there may be common underlying forces driving these interactions. Here, we show that the inherent uncertainty associated with future prospects together with individuals’ proneness to probability weighting generates a unifying framework for explaining a large number of puzzling behavioral findings: delay-dependent risk tolerance, aversion to sequential resolution of uncertainty, preferences for the timing of the resolution of uncertainty, the differential discounting of risky and certain outcomes, hyperbolic discounting, subadditive discounting, and the order dependence of prospect valuation. Furthermore, all these phenomena can be accommodated by the same set of preference parameter values and plausible levels of inherent uncertainty.

On the Nature of (Jump) Skewness Risk Premia

Market skewness risk is priced, but the components of its premium are not fully understood. We propose new trading strategies decomposing the skewness risk premium into jump and leverage effect components, and we analyze the skewness risk premia in the market for S&P 500 index options. We find that the skewness premium is higher when markets are closed than during trading hours, consistently with uncertainty resolution patterns by non-U.S investors; that it increases after left-tail market events; and that it is distinct from the variance premium. Moreover, during trading hours, the skewness premium is dominated by priced jump risk. This paper was accepted by Kay Giesecke, finance. Funding: P. Orłowski acknowledges financial support from the Doc.Mobility program of the Swiss National Science Foundation [Project P1TIP1_161875 “Option portfolio returns and dispersion”]. P. Schneider acknowledges financial support from the Swiss National Science Foundation [Projects 169582 “Model-free asset pricing” and 189086 “Scenarios”]. F. Trojani and P. Orłowski acknowledge financial support from the Swiss National Science Foundation [Project 150198 “Higher order robust resampling and multiple testing methods”] and the Swiss Finance Institute [Project “Term structures and cross-sections of asset risk premia”]. F. Trojani gratefully acknowledges support from the AXA Chair in Socioeconomic Risks of Financial Markets at the University of Turin. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4734 .

Monetary policy and uncertainty resolution in commodity markets

This paper examines the intraday changes of gold and crude oil implied volatility around the release of FOMC statements. We find that monetary policy releases lead to intraday uncertainty resolution in these commodity markets. The resolution of uncertainty is stronger after announcements accompanied by releases of the Summary of Economic Projections. We also show that monetary policy announcements contain information about future commodity demand and supply.

The availability of non-instrumental information increases risky decision-making

Contemporary models of decision-making under risk focus on estimating the final value of each alternative course of action. According to such frameworks, information that has no capacity to alter a future payoff (i.e., is “non-instrumental”) should have little effect on one’s preference for risk. Importantly, however, recent work has shown that information, despite being non-instrumental, may nevertheless exert a striking influence on behavior. Here, we tested whether the opportunity to passively observe the sequence of events following a decision could modulate risky behavior, even if that information could not possibly influence the final result. Across three experiments, 71 individuals chose to accept or reject gambles on a five-window slot machine. If a gamble was accepted, each window was sequentially revealed prior to the outcome being declared. Critically, we informed participants about which windows would subsequently provide veridical information about the gamble outcome, should that gamble be accepted. Our analyses revealed three key findings. First, the opportunity to observe the consequences of one’s choice significantly increased the likelihood of gambling, despite that information being entirely non-instrumental. Second, this effect generalized across different stakes. Finally, choices were driven predominantly by the likelihood that information could result in an earlier resolution of uncertainty. These findings demonstrate the importance of anticipatory information to decision-making under risk. More broadly, we provide strong evidence for the utility of non-instrumental information, by demonstrating its capacity to modulate primary economic decisions that should be driven by more motivationally salient variables associated with risk and reward.

Elucidating medial temporal and frontal lobe contributions to approach-avoidance conflict decision-making using functional MRI and the hierarchical drift diffusion model.

The prefrontal cortex (PFC) has long been associated with arbitrating between approach and avoidance in the face of conflicting and uncertain motivational information, but recent work has also highlighted medial temporal lobe (MTL) involvement. It remains unclear, however, how the contributions of these regions differ in their resolution of conflict information and uncertainty. We designed an fMRI paradigm in which participants approached or avoided object pairs that differed by motivational conflict and outcome uncertainty (complete certainty vs. complete uncertainty). Behavioral data and decision-making parameters estimated using the hierarchical drift diffusion model revealed that participants' responding was driven by conflict rather than uncertainty. Our neural data suggest that PFC areas contribute to cognitive control during approach-avoidance conflict by potentially adjusting response caution and the strength of evidence generated towards either choice, with differential involvement of anterior cingulate cortex and dorsolateral prefrontal cortex. The MTL, on the other hand, appears to contribute to evidence generation, with the hippocampus linked to evidence accumulation for stimuli. Although findings within perirhinal cortex were comparatively equivocal, some evidence suggests contributions to perceptual representations, particularly under conditions of threat. Our findings provide evidence that MTL and PFC regions may contribute uniquely to arbitrating approach-avoidance conflict.

Reflexive standardization and the resolution of uncertainty in the genomics clinic.

In genomics, the clinical application of Next Generation Sequencing technologies (such as Whole Genome or Exome Sequencing) has attracted considerable attention from UK policymakers, interested in the benefits such technologies could bring the National Health Service. However, this boosterism plays little attention to the challenges raised by a kind of result known as a Variant of Uncertain Significance, or VUS, which require clinical geneticists and related colleagues to classify ambiguous genomic variants as 'benign' or 'pathogenic'. With a rigorous analysis based on data gathered at 290 clinical meetings over a two-year period, this paper presents the first ethnographic account of decision-making around NGS technology in a NHS clinical genomics service, broadening our understanding of the role formal criteria play in the classification of VUS. Drawing on Stefan Timmermans' concept of 'reflexive standardisation' to explore the way in which clinical genetics staff classify such variants this paper explores the application of a set of criteria drafted by the American College of Medical Genetics and Genomics, highlighting the flexible way in which various resources - variant databases, computer programmes, the research literature - are drawn on to reach a decision. A crucial insight is how professionals' perception of, and trust in, the clinical practice at other genomics centres in the NHS, shapes their own application of criteria and the classification of a VUS as either benign or pathogenic.

Play in predictive minds: A cognitive theory of play.

In this article, we argue that a predictive processing framework (PP) may provide elements for a proximate model of play in children and adults. We propose that play is a behavior in which the agent, in contexts of freedom from the demands of certain competing cognitive systems, deliberately seeks out or creates surprising situations that gravitate toward sweet-spots of relative complexity with the goal of resolving surprise. We further propose that play is experientially associated with a feel-good quality because the agent is reducing significant levels of prediction error (i.e., surprise) faster than expected. We argue that this framework can unify a range of well-established findings in play and developmental research that highlights the role of play in learning, and that casts children as Bayesian learners. The theory integrates the role of positive valence in play (i.e., explaining why play is fun); and what it is to be in a playful mood. Central to the account is the idea that playful agents may create and establish an environment tailored to the generation and further resolution of surprise and uncertainty. Play emerges here as a variety of niche construction where the organism modulates its physical and social environment in order to maximize the productive potential of surprise. (PsycInfo Database Record (c) 2023 APA, all rights reserved).

The Credit Suisse CoCo wipeout: Facts, misperceptions, and lessons for financial regulation

The Credit Suisse CoCo wipeout: Facts, misperceptions, and lessons for financial regulation

Therapeutic touch and therapeutic alliance in pediatric care and neonatology: An active inference framework.

Therapeutic affective touch has been recognized as essential for survival, nurturing supportive interpersonal interactions, accelerating recovery-including reducing hospitalisations, and promoting overall health and building robust therapeutic alliances. Through the lens of active inference, we present an integrative model, combining therapeutic touch and communication, to achieve biobehavioural synchrony. This model speaks to how the brain develops a generative model required for recovery, developing successful therapeutic alliances, and regulating allostasis within paediatric manual therapy. We apply active inference to explain the neurophysiological and behavioural mechanisms that underwrite the development and maintenance of synchronous relationships through touch. This paper foregrounds the crucial role of therapeutic touch in developing a solid therapeutic alliance, the clinical effectiveness of paediatric care, and triadic synchrony between health care practitioner, caregiver, and infant in a variety of clinical situations. We start by providing a brief overview of the significance and clinical role of touch in the development of social interactions in infants; facilitating a positive therapeutic alliance and restoring homeostasis through touch to allow a more efficient process of allostatic regulation. Moreover, we explain the role of CT tactile afferents in achieving positive clinical outcomes and updating prior beliefs. We then discuss how touch is implemented in treatment sessions to promote cooperative interactions in the clinic and facilitate theory of mind. This underwrites biobehavioural synchrony, epistemic trust, empathy, and the resolution of uncertainty. The ensuing framework is underpinned by a critical application of the active inference framework to the fields of pediatrics and neonatology.

Precaution with multiple instruments: The importance of substitution effects

Using a unified approach, we show how precautionary saving, self-protection and self-insurance are jointly determined by risk preferences and the preference over the timing of uncertainty resolution. We provide a general result when decision-makers use a single instrument at a time. When multiple instruments are used simultaneously, substitution effects arise which attenuate precaution. A numerical analysis demonstrates that these substitution effects can dominate the precautionary effect. For plausible risk and time preference parameters and empirically relevant income risk levels, substitution effects can lead to precautionary disinvestment in self-protection and even crowd out the demand for self-protection entirely. In this case, what looks like lack of precautionary behavior at the surface might not be indicative of lack of prudence but simply be the result of omitted-instrument bias.

The Leading Premium

Abstract In this paper, we consider conditional measures of lead-lag relations between aggregate growth and industry-level cash flow growth in the United States. Our results show that firms in leading industries pay an average annualized return 3.6$\%$ higher than that of firms in lagging industries. Using both time-series and cross-sectional tests, we estimate an annual pure timing premium ranging from 1.2$\%$ to 1.7$\%$. This finding can be rationalized in a model in which (a) agents price growth news shocks, and (b) leading industries provide valuable resolution of uncertainty about the growth prospects of lagging industries. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Forward-Looking Loan Loss Provisions, Earnings Announcements and the Resolution of Disagreement and Uncertainty among Investors

Forward-Looking Loan Loss Provisions, Earnings Announcements and the Resolution of Disagreement and Uncertainty among Investors

Recursive Preferences, Correlation Aversion, and the Temporal Resolution of Uncertainty

Recursive Preferences, Correlation Aversion, and the Temporal Resolution of Uncertainty

Mitigating Disaster Risks in the Age of Climate Change

Emissions abatement alone cannot address the consequences of global warming for weather disasters. We model how society adapts to manage disaster risks to capital stock. Optimal adaptation—a mix of firm‐level efforts and public spending—varies as society learns about the adverse consequences of global warming for disaster arrivals. Taxes on capital are needed alongside those on carbon to achieve the first best. We apply our model to country‐level control of flooding from tropical cyclones. Learning rationalizes empirical findings, including the responses of Tobin's q, equity risk premium, and risk‐free rate to disaster arrivals. Adaptation is more valuable under learning than a counterfactual no‐learning environment. Learning alters social‐cost‐of‐carbon projections due to the interaction of uncertainty resolution and endogenous adaptive response.