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18 pages, 315 KB

Open AccessArticle

Rethinking Economic Measurement Using Statistical Ensembles

by Cal Abel

Entropy 2025, 27(3), 265; https://doi.org/10.3390/e27030265 - 3 Mar 2025

Viewed by 1614

The axiomatic framework of quantum game theory gives us a new platform for exploring economics by resolving the foundational problems that have long plagued the expected utility hypothesis. This platform gives us a previously unrecognized tool in economics, the statistical ensemble, which we apply across three distinct economic spheres. We examine choice under uncertainty and find that the Allais paradox disappears. For over seventy years, this paradox has acted as a barrier to investigating human choice by masking actual choice heuristics. We discover a powerful connection between the canonical ensemble and neoclassical economics and demonstrate this connection’s predictive capability by examining income distributions in the United States over 24 years. This model is an astonishingly accurate predictor of economic behavior, using just the income distribution and the total exergy input into the economy. Finally, we examine the ideas of equality of outcome versus equality of opportunity. We show how to formally consider equality of outcome as a Bose–Einstein condensate and how its achievement leads to a corresponding collapse in economic activity. We call this new platform ‘statistical economics’ due to its reliance on statistical ensembles. Full article

(This article belongs to the Special Issue 200 Years Anniversary of “Sadi Carnot, Réflexions Sur La Puissance Motrice Du Feu”; Bachelier: Paris, France, 1824)

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23 pages, 1914 KB

Open AccessArticle

Asymmetrical Property of the Subproportionality of Weighting Function in Prospect Theory: Is It Real and How Can It Be Achieved?

by Yuan-Na Huang, Si-Chu Shen, Shu-Wen Yang, Yi Kuang, Yun-Xiao Li and Shu Li

Symmetry 2021, 13(10), 1928; https://doi.org/10.3390/sym13101928 - 14 Oct 2021

Cited by 6 | Viewed by 4341

Abstract

An asymmetrical property of the probability weighting function, namely, subproportionality, was derived from observations. Subproportionality can provide a reasonable explanation for accommodating the Allais paradox and, therefore, deserves replication for its high impact. The present study aimed to explore the mechanism of subproportionality by comparing the two completely opposite decision mechanisms: prospect theory and equate-to-differentiate theory. Results revealed that the underlying mechanism supports the prediction of equate-to-differentiate theory but not prospect theory in the diagnostic stimuli condition. Knowledge regarding which intra-dimensional difference between Options A and B is greater, not knowledge regarding which option’s overall prospect value is greater, indeed predicts option preference. Our findings may deepen current understanding on the mechanisms behind the simple risky choice with a single-non-zero outcome. Additionally, these findings will hopefully encourage subsequent researchers to take a fresh look at the Allais paradox. Full article

(This article belongs to the Special Issue Symmetry in Cognition and Emotion)

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16 pages, 1937 KB

Open AccessArticle

Entropy-Based Risk Control of Geological Disasters in Mountain Tunnels under Uncertain Environments

by Yuanpu Xia, Ziming Xiong, Zhu Wen, Hao Lu and Xin Dong

Entropy 2018, 20(7), 503; https://doi.org/10.3390/e20070503 - 1 Jul 2018

Cited by 9 | Viewed by 3705

Abstract

Uncertainty is one of the main sources of risk of geological hazards in tunnel engineering. Uncertainty information not only affects the accuracy of evaluation results, but also affects the reliability of decision-making schemes. Therefore, it is necessary to evaluate and control the impact of uncertainty on risk. In this study, the problems in the existing entropy-hazard model such as inefficient decision-making and failure of decision-making are analysed, and an improved uncertainty evaluation and control process are proposed. Then the tolerance cost, the key factor in the decision-making model, is also discussed. It is considered that the amount of change in risk value (

R_{1}

) can better reflect the psychological behaviour of decision-makers. Thirdly, common multi-attribute decision-making models, such as the expected utility-entropy model, are analysed, and then the viewpoint of different types of decision-making issues that require different decision methods is proposed. The well-known Allais paradox is explained by the proposed methods. Finally, the engineering application results show that the uncertainty control idea proposed here is accurate and effective. This research indicates a direction for further research into uncertainty, and risk control, issues affecting underground engineering works. Full article

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16 pages, 325 KB

Open AccessFeature PaperArticle

When Irrational Biases Are Smart: A Fuzzy-Trace Theory of Complex Decision Making

by Valerie Reyna

J. Intell. 2018, 6(2), 29; https://doi.org/10.3390/jintelligence6020029 - 8 Jun 2018

Cited by 28 | Viewed by 11387

Abstract

I take a decision-making approach to consider ways of addressing the “unresolved and dramatic problems in the world”. Traditional approaches to good decision-making are reviewed. These approaches reduce complex decisions to tradeoffs between magnitudes of probabilities, and outcomes in which the quantity and precision of information are key to making good decisions. I discuss a contrasting framework, called “fuzzy-trace theory”, which emphasizes understanding the simple gist of options and applying core social and moral values. Importantly, the tendency to rely on meaningful but simple gist increases from childhood to adulthood (or, in adulthood, as people gain experience in a domain), so that specific irrational biases grow with knowledge and experience. As predicted theoretically, these violations of rationality in the traditional sense are associated empirically with healthier and more adaptive outcomes. Thus, interventions that help decision makers understand the essential gist of their options and how it connects to core values are practical approaches to reducing “unresolved and dramatic problems in the world” one decision at a time. Full article

(This article belongs to the Special Issue If Intelligence Is Truly Important to Real-World Adaptation, and IQs Have Risen 30+ Points in the Past Century (Flynn Effect), then Why Are There So Many Unresolved and Dramatic Problems in the World, and What Can Be Done About It?)

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