Cumulative prospect theory Puns

Hey, I studied CPT some years ago, but today a professor of mine send me this exercises about finding risk premium in lotterys using CPT model. Can somebody help me?

Here it is:

Typically the EU, RDU or CPT values of a lottery do not contain much information because these values depend on the level and unit of utility chosen. It is much more interesting to report the certainty equivalent of a lottery, and the risk premium, under the different theories (EUT. RDU or CPT). These risk premiums are all expressed in the same unit (dollars or euros), and therefore the risk premiums can be meaningfully compared to assess how much risk aversion each theory gives us. This exercise illustrates this procedure. 3 points each for questions a) to f) and 2 points for g). .

Consider the lottery (80, 0.01; 60, 0.35; 30, 0.35; -30, 0.29) Assume CPT with the parameters estimated by Tversky and Kahneman: v^+ (x)=x^α v^- (x)=〖-λ(-x)〗^β w^+ (p)=p^γ/((p^γ+(1-〖p)〗^γ )^(1/γ) ) w^- (p)=p^δ/((p^δ+(1-〖p)〗^δ )^(1/δ) ) α=0.88 β=0.88 λ=2.25 γ=0.61 δ=0.69

Calculate the risk premium of the lottery.

This might be a stupid question but I was wondering how does one reach a cumulative dose of a medicine like accutane? Does it keep accumulating in your body till you keep taking it? Some people are on it for a year or 2 on low doses. Won't the body filter it and throw it out?

How will we have 120mg/150mg per kg then? Just curious.

So I've been on Accutane for 1 month at 20 mg. I just went to my second derm appointment and she decided to keep me on 20 mg because I was getting alot of side effects. I told her I wanted to bump up to 30 mg this month because I don't want to be on Accutane for a year to reach my cumulative dosage. I'm 125 pounds so this would make it almost a year if I stayed on 20 mg. She told me that the cumulative dosage is the "old way" of prescribing Accutane. The new theory is the patient stays on Accutane until they're consistently clear for a few months (guessing 3 mths?). She said that the goal would be to keep me on 7 months maximum. Before I started Accutane I had persistent mild-moderate ranging to moderate acne. I've had it since I was 19 and tried every topical and oral medication. So has anyone's dermatologist follow the new theory? I just don't want to relapse 😑

Hii guys, from all my heart me and my friend started this podcast series named 'econs at work' and it has more than 20 episodes now. I would be truly greatful as a high schooler if you could listen to it and especially the episode on prospect theory. It is also a really useful source to widen your horizon on economics.

https://open.spotify.com/episode/2sNKa2Uldk9QGHHcETgooG

https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy81ZTI0YzYwYy9wb2RjYXN0L3Jzcw==

Its also on apple podcasts- just search 'Econs at work'

Among the largest borrowers were JPMorgan Chase, Goldman Sachs and Citigroup, three of the Wall Street banks that were at the center of the subprime and derivatives crisis in 2008 that brought down the U.S. economy. That’s blockbuster news. But as of 7 a.m. this morning, not one major business media outlet has reported the details of the Fed’s big reveal.

JPMorgan Chase and Citigroup’s Citibank are among the largest deposit-taking, federally-insured banks in the U.S. Why they needed to borrow from the Fed on an emergency basis in the fall of 2019.

Never before seen a total news blackout of a financial news story of this magnitude in 35 years of monitoring Wall Street and the Fed.

The Classic Prisoner’s Dilemma. I'm sure you're all well aware of it, and if not then you're the perfect retard to be investing into GME.

Hold or Paperhand GME stonks?

The game theory of the prisoner's dilemma is well known and it is clear that those holding onto GME stonks are themselves in such a dilemma . You never want to be the one holding the bags, by holding onto the stonk when it’s overpriced you are directly putting yourself in the position of this happening, you only profit by getting rid of the stocks whilst they’re overpriced. From the rational position of this the Nash Equilibrium is clearly for people to sell out and sell their GME stonks as fast as they can. It’s obviously overpriced and you have to be as retarded as fuck to hold onto inflated stocks of a company with no prospects. By selling the stock you can pass it onto some other retard to hold instead.

The thing is though, the Nash Equilibrium relies on one crucial factor which is normally assumed: rational agents. Enter WSB. What if instead of assuming rational agents, you’re instead able to assume irrational agents? What if you’re able to predicate that most of the players will be retarded dipshits? Well then the outcome of a prisoner’s dilemma is then reversed, it is now profitable to play like a retarded dipshit yourself and hold your position regardless of if it’s better for you sell out. To the outside rational player you’re a fucking idiot and you’re making a mistake and you’re about to lose all your money but inside your bubble of retards you’re the ones that actual have the advantage as a collective group of buffoons. The WallStreet larks, ever since its inception, have been able to operate in the market based on rational reactions and behaviours but they’re now facing a new aspect to the market. This is one I feel they are ill prepared for, that of an irrational market and the resulting reversed prisoner’s dilemma which they can now have on their hands. In this marker they can be the ones putting themselves at a disadvantage by trying to continue playing the game as a rational actor.

You see it being asked on WSB a lot. Why don’t apes try to short squeeze an actually decent stock where the company has proper prospects, like UWMC or something. The then deflated joke response is often: “it’s too decent a stock to actually fly on here”. But the reality is exactly that and that actually is the true problem. People saying that are thinking from a rational perspective and th

I began learning guitar about 3 months ago, and when I set out to do that I started taking private guitar lessons and music theory lessons, and now I'm doing singing lessons too.

I have learned a decent bit about music theory, the fundamental stuff like the musical alphabet, how to construct a major/minor scale, the names of all the intervals, how many tones/semitones make up the intervals, the Nashville Number System, etc.

I'd like to know what kinds of things I should know back to front. Like, I don't really have any of the scales memorized except for C Major and A Minor, obviously. If you gave me the time to figure it out, I could certainly do it since I know the formula, but is that the kind of thing I should have memorized?

I figure I should also have the chords of each key memorized too right? Just kinda looking for a list of things I should spend a bit of time trying to know by heart.

Was just looking at the COVID stats, and was trying to "visualize" the numbers....

According to the CDC, North Carolina has just surpassed 20,000 deaths attributed to COVID-19. [Source - just select NC from the drop down]

The PNC arena (Raleigh's largest indoor arena, and North Carolina's second largest venue) can accommodate a seating capacity of up to 20,000 [[Source]] (https://www.pncarena.com/arena-info/venue-facts-history#:~:text=PNC%20Arena%20encompasses%20approximately%20700%2C000,capacity%20of%20up%20to%2020%2C000.)

Here's an image I found online of a sold out event at PNC for some reference.

Not trying to push any agenda - just thought it was interesting to share, albeit morbid and sad...

According to prospect theory, people evaluate outcomes relative to expectations. Thus it's not surprising that NFL fans are disappointed when their team loses, and even more so when a shock loss occurs. In fact, domestic violence and cardiovascular deaths increase.

The increase in cardiovascular deaths stems from stress: an increase in heart oxygen demand and decrease in heart oxygen supply. It's interesting how prospect theory manifests itself in the human body!

Source:

Football Emotions Can Kill, which cites Card and Dahl (2011), Kloner et al. (2009), Schwartz et al. (2013), and Leeka et al. (2010).

Prospect theory is a theory in the psychology of choice more specifically how we assess loss and gains with risk.

This theory explains that we evaluate a situation relative to a reference point.

How does this relate to AMC stock you ask?

Well, it is quite simple!

Let's take two scenarios.

A. You are more about the big picture, you got in when the stock was at 10$, you know the price will fluctuate a lot, but you believe that it will eventually squeeze. Anything in between is more or less important. (Reference point)

When it closes at 54$ on Friday, you see this as gains because 1) The SI is on an upward trend and short haven't covered. 2) Even taking fluctuation into account, we are on an upward trend if you zoom out.

Relative to your reference, you went from 10$ to 54$ and short haven't covered (they even doubled down). Therefore, the squeeze scenario is still alive and well.

B. You stress over the fluctuation of price because you wanna see green ALL THE TIME. You listen to all the people hyping dates, price target, etc (all of which is impossible to predict btw). You focus on short-term gains. Dates and price target makes you believe theses needs to happen in order for the squeeze to work.

When it closes at 54$ on Friday, you see this as a loss because 1) You were told we would hit 100$ by Friday, forcing a gamma squeeze. 2) You were expecting the new rules to kick the HF in the face so hard they would cry, nothing happened.

Relative to your reference, you went from 59$ last Friday to 54$ this Friday. All the predictions for this week were false and the new rules didn't kick the HF in the face. Your expectation (even though unrealistic) makes you see this as a major loss and you think we are further from the squeeze than we were last week.

We are way more susceptible to losses than gains. In order to balance things in a decision scenario, you need to win 1,5 to 2,5 more than you lose.

It's easy to see that people in scenario A are happier than scenario B.

Hyping date and the price target is only good to discourage people and provoke a sentiment of defeat.

Look at the bigger picture, read the DD and focus and the important data!

Edit 1: Sorry, forgot to say I like the stonk and make my own decisions.

Prospect Theory attempts to describe the evaluation of financial decisions and their potential outcomes. There are three cognitive features central to Prospect Theory.

1. Contrast Principle: Evaluation of a potential financial outcome is relative to a reference point (eg. level of wealth before the financial decision). Outcomes that are more desirable than the reference point are considered to have positive psychological value while outcomes less desirable are considered to have negative value. This principle is in contrast to Utility Theory which states that financial outcomes are based solely on their independent value (eg. gain of $200) and are not relative to a prior point of reference (eg. gain in net worth of 0.5%).
2. Diminishing Sensitivity: As the potential outcome increases or decreases more and more, its psychological value also increases or decreases respectively, but to a lesser and lesser extent. For example, given the same reference point, the subjective difference between a potential gain of $900 and $1000 is much less than the difference between a gain of $100 and $200.
3. Loss Aversion: When directly compared to one another, potential losses of equal size tend to outweigh potential gains of the same magnitude. In other words, the response to potential losses is stronger than the response to potential gains of equal size. The “loss aversion ratio” (value between a loss and gain that carry equal psychological weight) is generally between 1.5 to 2.5, however the ratio varies depending on individual risk tolerance and the magnitude of the stakes at risk. Loss aversion tends to increase when the stakes rise but to a lesser and lesser degree, as would be explained by Diminishing Sensitivity. However, in cases where the possible loss is potentially ruinous the coefficient is likely to be very high.

These three features are illustrated in the diagram attached below.

Source: https://www.economicshelp.org/wp-content/uploads/2017/03/prospect-theory.jpg

See: Thinking, Fast and Slow by Daniel Kahneman pg. 278-288

• ISBN: 9780521406123

• APA PsychNet

This is a book chapter, unfortunately not on SciHub/Libgen.

TITLE EDIT: Top 20 P5 Teams

Those top 20 teams:

• Alabama, Ohio State, Notre Dame, Michigan, Oklahoma, Texas, USC, Penn State, Nebraska, Tennessee, Florida State, Georgia, LSU, Miami, Florida, Auburn, Clemson, Washington, Arizona State, and Texas A&M

...will combine for a record of 158-100 and a winning percentage of 61.24%. The last year that was worse than 2021 was 1965 when these 20 teams went a combined 120-77 for a percentage of 58.54%. For juxtaposition, the average cumulative win percentage of these 20 teams over the last 20 years has been 68.27%. (Yes, I acknowledge that going back at least 20 years but especially 56 years means these 20 teams weren't always the top 20, but that requires a dynamic list that I'm not capable of, so be nice).

If you're interested, the reverse of this - the best these 20 teams have done in the same year since 1900 was 1920 with a combined percentage of 74.48%. The best year after that (and best by any reasonable definition of "modern era") was 1993 with a combined percentage of 73.95%.

Title-edit-follow-up: The G5 teams that would crack the top 20 are: Boise State at #2 (with ~400 fewer games played than their neighboring teams), Coastal Carolina at #15 (with a huge asterisk with only 228 games played), Appalachian State at #16 (ok, at least you're over 1000 games played), and Georgia Southern as the new #20 (again, back down to only 665 games played)

Hi guys. I'm looking into possible research directions and I was wondering what people think. As a grad student, I've been doing lots of permutation groups and as a result, graph theory since we study automorphism groups. Now as I am looking into the future, I'd like to do a PhD but I am a bit torn. There are two possible pathways I could take, given two institutions I like.

One possibility is for me to do research on primitive groups, which would set me up very well for algebra positions and graphs arise naturally. I'd have a pretty extensive background so already know a lot about groups.

Another one is algorithmic graph theory. I am definitely not prepared for this one with my background but I've been advised that it is much easier to pick up than pure group theoretical definitions. This feels like there'd be more options in the future for me to continue my research because algorithms are pretty important. That isn't to say that group theory will be run obsolete but I am wondering if it is a good career path to choose.

What are your thoughts in algebraic graph theory research? Does the classic pure group theory seem more enticing than the algorithmic one?

Hey all - change lists for the latest cumulative updates are now up. Linked out below for your convenience:

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Was just looking at the COVID stats, and was trying to "visualize" the numbers....

According to the CDC, North Carolina has just surpassed 20,000 deaths attributed to COVID-19. [Source - just select NC from the drop down]

The PNC arena (Raleigh's largest indoor arena, and North Carolina's second largest venue) can accommodate a seating capacity of up to 20,000 [Source].

Here's an image I found online of a sold out PNC arena for some reference.

Not trying to push any agenda - just thought it was interesting to share, albeit morbid and sad...