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  2. 2019
  3. March
  4. A quantum-probabilistic paradigm: Non-consequential reasoning and state dependence in investment choice

Mar

06

Wednesday

A quantum-probabilistic paradigm: Non-consequential reasoning and state dependence in investment choice

1.00pm

Seminars

Public

Speaker: Polina Khrennikova, University of Leicester

Seminal findings involving payoffs (Shafir and Tversky, 1992; Tversky and Shafir, 1992; Shafir, 1994) showed that individuals exhibit state-dependent behaviour in different informational contexts. In particular, in the condition of uncertainty and risk, individuals tend to exhibit uncertainty aversion. The core principle of rational (consequential) decision making, coined by Savage (1954) the "Savage Sure Thing’ principle", has been shown to be violated. In mathematical language, this violation is equivalent to non-satisfaction of the ‘‘Law of total probability’’ by (Kolmogorov, 1933). Given the importance of the original findings in the call for a generalization of the classical expected utility, we perform in this paper a set of experiments related to expressing investment preferences: (i) under objective risk, (ii) after a preceding gain, or a loss.

In accordance with the previous findings, we detected state dependence in human judgement (previous gain and  loss change the preference state of the participants),  as well as  a deviation from consequential reasoning under risk. We propose a quantum probabilistic model of agents’ preferences, where non-consequentialism and state dependence can be well explained via interference of complex probability amplitudes. A geometric depiction of the experimental findings with a state reconstruction procedure from statistical data via the inverse Born’s rule (1926), allows for an accurate representation of agents’ preference formation in a risky investment choice.

Sandwich lunch available from 12.30pm, seminar starts at 1.00pm.

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When and where

1.00pm - 2.00pmWednesday 6th March 2019

D427 City, University of London Northampton Square London EC1V 0HB United Kingdom