Using randomly generated sequences of binary events we asked participants to make predictions about the next event. It turned out that while predicting uncertain events, people do not behave unsystematically. Our research identifies four types of relatively consistent strategies for predicting uncertain binary events: a strategy immune to short-run sequential dependencies consisting of the persistent prediction of long-run majority events, hereafter called the long-run momentum strategy ; a strategy immune to short-run sequential dependencies consisting of the persistent prediction of long-run (...) minority events, called the long-run contrarian strategy ; a strategy sensitive to short-run sequential dependencies consisting of the prediction of short-run majority events, called the short-run momentum strategy ; and a strategy sensitive to short-run sequential dependencies consisting of the prediction of short-run minority events, called the short-run contrarian strategy . When the character of events remains unknown, the most common strategy is the short-run momentum strategy. With the increase of a perceived randomness of the situation, people tend more often to use the short-run contrarian strategy. People differ in their general beliefs about the continuation or reversal of a trend in various natural and social processes. Trend believers, when facing sequences of binary events commonly perceived as random, tend to use momentum strategies, whereas those who believe in the trend's reversal tend to use contrarian strategies. (shrink)

This paper provides a model of the transition from hegemonic trade to contemporary (or fair) trade. Hegemonic trade is an instance of the two player game called Bully (Poundstone 1992) and Called Bluff (Snyder and Diesing 1977); contemporary trade is an instance of Prisoner's Dilemma (Krugman and Obstfeld 1991). In this paper, I show that a nation under the thumb of a hegemon, called the conciliatory nation, can induce fair trade. Further, I show that to induce fair trade, the conciliatory (...) nation must not be timied. (shrink)

This paper presents a theory of conclusions based upon the suggestions of Tukey [21]. The logic offered here is based upon two rules of detachment that occur naturally in probabilistic inference, a traditional rule of acceptance, and a rule of rejection. The rules of detachment provide flexibility: the theory of conclusions can account for both statistical and deductive arguments. The rule of acceptance governs the acceptance of new conclusions, is a variant of the rule of high probability, and is a (...) limiting case of a decision-theoretic rule of acceptance. The rule of rejection governs the removal of previously accepted conclusions on the basis of new evidence. The resulting theory of conclusions is not a decision-theoretic logic but does, through the aforementioned limiting property, provide a line of demarcation between decision and conclusion (i.e., nondecision) logics of acceptance. The theory of conclusions therefore complements decision-theoretic inference. The theory of conclusions presented here satisfies Tukey's desiderata, specifically: (1) conclusions are statements which are accepted on the basis of unusually strong evidence; (2) conclusions are to remain accepted unless and until unusually strong evidence to the contrary arises; (3) conclusions are subject to future rejection, when and if the evidence against them becomes strong enough. Finally, the proferred theory of conclusions has a strong conservative bias, reflecting Tukey's aims. (shrink)

Bicchieri (The grammar of society: The nature and dynamics of norms, 2006, xi) presents a formal analysis of norms that answers the questions of "when, how, and to what degree" norms affect human behavior in the play of games. The purpose of this paper is to apply a variation of the Bicchieri norms analysis to generate a model of norms-based play of the traditional deterrence game (Zagare and Kilgour, Int Stud Q 37: 1-27, 1993; Morrow, Game theory for political scientists, (...) 1994), the paradigmatic model of conflict initiation in International Relations. The deterrence game is modeled here as a sequential decision problem. As such, our analysis is an adaptation of Bicchieri's game-theoretic formalization of norms to what we will call the norms account of the game. We find that the standard account of the traditional deterrence game is a special case of the norms account of the game. We also show that the adaptation of Bicchieri's analysis of social norms yields new and interesting claims regarding when, how, and to what degree norms operate as a constraint on risk-related behavior in the traditional deterrence game. Moreover, we discuss how the results of the model provide testable propositions of relevance to the role of norms in international interactions. (shrink)

In hisStudy of War, Q. Wright considered a model for the probability of warP during a period ofn crises, and proposed the equationP=1– n, wherep is the probability of war escalating at each individual crisis. This probability measure was formally derived recently by Cioffi -Revilla, using the general theory of political reliability and an interpretation of the n-crises problem as a branching process. Two new, alternate solutions are presented here, one using D. Bernoulli''s St. Petersburg Paradox as an analogue, the (...) other based on the logic of conditional probabilities. Analysis shows that, while Wright''s solution is robust with regard to the general overall behavior ofp andn, some significant qualitative and quantitative differences emerge from the alternative solutions. In particular,P converges to 1 only in a special case and not generally. (shrink)