Saturday, September 21, 2019

Decision-Making Theory: New Research Findings

How we make decisions depends on how uncertain we are

Flexible combination of reward information across primates
Abstract
A fundamental but rarely contested assumption in economics and neuroeconomics is that decision-makers compute subjective values of risky options by multiplying functions of reward probability and magnitude. By contrast, an additive strategy for valuation allows flexible combination of reward information required in uncertain or changing environments. We hypothesized that the level of uncertainty in the reward environment should determine the strategy used for valuation and choice. To test this hypothesis, we examined choice between risky options in humans and rhesus macaques across three tasks with different levels of uncertainty. We found that whereas humans and monkeys adopted a multiplicative strategy under risk when probabilities are known, both species spontaneously adopted an additive strategy under uncertainty when probabilities must be learned. Additionally, the level of volatility influenced relative weighting of certain and uncertain reward information, and this was reflected in the encoding of reward magnitude by neurons in the dorsolateral prefrontal cortex. 

Where is the Stock Market Headed?

Friday, September 20, 2019

Economics, Technology and Politics

Why Andrew Yang Matters
“In the culture war that currently cleaves America, there are three sides. There are progressives who believe that racism, nativism, and misogyny powered Donald Trump’s rise and must be defeated. There are conservatives who believe that Trump’s election was a response to “political correctness”—the left’s effort to demonize as bigoted anyone who defends the traditions that made America great. And there’s a third group that thinks it’s all a dangerous distraction, a fight over where to place the chaise longues on the Titanic. What’s killing America, this camp argues, is bad economics; treat that and the identity hatreds will fade. Over the past quarter century, two presidential candidates have mobilized these economics-first, culture-war-indifferent voters into a potent force. The first was Ross Perot. The second is Andrew Yang.”

Andrew Yang’s Quest to ‘Make America Think Harder’

Silicon Valley Goes to Therapy

Latin America's Troubled Economies

Reigniting Growth in India

Thursday, September 19, 2019

Supply-Demand Model of the Labor Market

The Debate Surrounding the Supply-Demand Model of the Labor Market
Affiliation of Debate Participants:
Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute [AEI leans to the political right]
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University. [Smith typically leans to the center-left of the political spectrum]

Further Readings on the Minimum Wage Debate: