infonet-economy

Contrary to what traditional asset pricing would imply, a strategy that bets against beta, by going long in low beta stocks and short in high beta stocks, tends to outperform the market. We consider a market in which diversity is maintained, i.e. no single stock can dominate the entire market, and we show that beta-arbitrage strategies mechanically out-perform the market portfolio.…

To be useful, cognitive models with fitted parameters should show generalizability across time and allow accurate predictions of future observations. It has been proposed that hierarchical procedures yield better estimates of model parameters than do nonhierarchical, independent approaches, because the formers’ estimates for individuals within a group can mutually inform each other.…

Many theories on cognition assume that people adapt their decision strategies depending on the situation they face. To test if and how affect guides the selection of decision strategies, we conducted an online study (N = 166), where different mood states were induced through video clips. Results indicate that mood influenced the use of decision strategies. Negative mood, in…

Knowledge about other people's preferences is essential for successful social interactions, but what exactly are the driving factors that determine how well we can predict the likes and dislikes of people around us? To investigate the accuracy of couples' preference predictions we outline and empirically test three hypotheses: The positive valence hypothesis predicts that…

Many economic theories of decision making assume that people evaluate options independently of other available options. However, recent cognitive theories such as decision field theory suggest that people’s evaluations rely on a relative comparison of the options’ potential consequences such that the subjective value of an option critically depends on the context in which it is…