Typescript (photocopy). / Digitized by Kansas Correctional Industries

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, 1982. / MICROFICHE COPY AVAILABLE IN ARCHIVES AND ROTCH / Bibliography: leaves 223-229. / by Scott Douglas Cook. / Ph.D.

This dissertation offers a theory of political persuasion rooted in a Bayesian model of information processing. I support this theory with the results of 20 survey experiments, conducted variously on convenience samples and nationally-representative surveys. From these data, I draw four main conclusions. First, when confronted with persuasive messages, individuals update their views in the direction of information. Second, people change their minds about political issues in small increments. Third, persuasion in the direction of information occurs regardless of background characteristics, initial beliefs, or ideological position. Finally, these changes in political attitudes are not ephemeral, in most cases lasting at least 10 days. These findings stand in contrast to the predictions of the attitude polarization literature, which posits that the effects of persuasion attempts will be positive for some, but negative for others. Across these 20 experiments, I was unable to find any evidence of negative effects (defined as attitude changes away from treatment information) for any subgroup defined by standard demographics, prior attitudes, or their intersections. Instead, people appear to update their views in a manner consistent with Bayes' rule, i.e., as a weighted average of prior beliefs and new information.

Clearinghouses insure trades. Acting as a central counterparty (CCP), clearinghouses consolidate financial exposures across multiple institutions, aiding the efficient management of counterparty credit risk. In this thesis, we study the decision problem faced by for-profit clearinghouses, focusing on primary economic incentives driving their determination of layers of loss-absorbing capital. The clearinghouse's loss-allocation mechanism, referred to as the default waterfall, governs the allocation and management of counterparty risk. This stock of loss-absorbing capital typically consists of initial margins, default funds, and the clearinghouse's contributed equity. We separate the overall decision problem into two distinct subproblems and study them individually. The first is the clearinghouse's choice of initial margin and clearing fee requirements, and the second involves its choice of resources further down the waterfall, namely the default funds and clearinghouse equity. We solve for the clearinghouse's equilibrium choices in both cases explicitly, and address the different economic roles they play in the clearinghouse's profit-maximization process. The models presented in this thesis show, without exception, that clearinghouse choices should depend not only on the riskiness of the cleared position but also on market and participants' characteristics such as default probabilities, fundamental value, and funding opportunity cost. Our results have important policy implications. For instance, we predict a counteracting force that dampens monetary easing enacted via low interest rate policies. When funding opportunity costs are low, our research shows that clearinghouses employ highly conservative margin and default funds, which tie up capital and credit. This is supported by the low interest rate environment following the financial crisis of 2007--08. In addition to low productivity growth and return on capital, major banks have chosen to accumulate large cash piles on their balance sheets rather than increase lending. In terms of systemic risk, our empirical work, joint with the U.S. Commodity Futures Trading Commission (CFTC), points to the possibility of destabilizing loss and margin spirals: in the terminology of Brunnermeier and Pedersen (2009), we argue that a major clearinghouse's behavior is consistent with that of an uninformed financier and that common shocks to credit quality can lead to tightening margin constraints.

When a decision is made based on noisy evidence, it is often a good strategy to take multiple samples of evidence up to a threshold before committing to a choice. Such process, termed bounded evidence accumulation, have successfully explained human and nonhuman behavior (speed and accuracy of choices) and neural recordings quantitatively. In this thesis, we exploit the quantitative relationship between evidence, choice, and reaction times (inverse of speed), to infer decision rules that are not reported directly. In Part I, we consider decisions based on one stream of evidence. In Chapter 2, we start by examining decisions that are not reported immediately but felt to be made at some point. We show that, in a perceptual decision-making task, we can predict the proportion of choices from the reported timing of covert decisions. We suggest that the awareness of having decided corresponds to the threshold-crossing of the accumulated evidence, rather than a post hoc inference or arbitrary report. For the type of decisions reported in Chapter 2 and many others, it has been suggested that the terminating threshold is not constant but decreases over time. In Chapter 3, we propose a method that estimates the threshold without any assumption on its shape. As a step toward more complex decisions, in Part II we consider decisions based on two streams of evidence. In Chapter 4, we summarize the results from human psychophysics experiments involving simultaneous motion-color judgments. The results suggest that information bearing on two dimensions of a decision can be acquired in parallel, whereas incorporation of information into a combined decision involves serial access to these parallel streams. Here, one natural question is how complete the seriality is. In Chapter 5, we propose a method to estimate the degree of seriality of two evidence accumulation processes. Another question is whether the two streams are acquired in parallel even when the stimulus viewing duration is not limited, and hence there is no apparent advantage to parallel acquisition given the serial evidence accumulation stage. In Chapter 6, we propose a method to estimate the probability of simultaneous acquisition of two evidence streams given the choice and evidence streams. Collectively, the work in this thesis presents new ways to study decision rules quantitatively given noninvasive measures such as the contents of the evidence stream(s), decision times, and the choice.

This dissertation analyzes problems related to matching in general networks and decision under uncertainty. Chapter 1 introduces the framework of convex matching games. Chapter 2 discusses three distinct applications of the framework. Chapter 3 develops a new test of choice models with expected utility. In Chapter 1, I use Scarf's lemma to show that given a convexity structure that I introduce, the core of a matching game is always nonempty, and the framework I introduce can accommodate general contracting networks, multilateral contracts, and complementary preferences. In Chapter 2, I provide three applications to show how the convexity structure is satisfied in different contexts by different assumptions. In the first application, I show that in large economies, the convexity structure is satisfied if the set of participants in each contract is small compared to the overall economy. The second application considers finite economies, and I show that the convexity structure is satisfied if all agents have convex, but not necessarily substitutable, preferences. The third application considers a large-firm, many-to-one matching market with peer preferences, and I show that the convexity structure is satisfied under convexity of preferences and a competition aversion restriction on workers' preferences over colleagues. In Chapter 3, I show that some form of cyclic choice pattern across distinct information scenarios should be regarded as inconsistent with a utility function that is linear in beliefs.

Nowadays consumers can easily access to vast amounts of product information before making a purchase. Yet, limitations on the ability to process information force consumers to make choices regarding the subjects to which they pay more or less attention. In this dissertation, I study how a consumer optimally allocates attention to various product information before making a purchase decision and how a seller should design the marketing strategies taking into account the consumer's attention allocation decision. I find that either a consumer engages in “confirmatory” search under which she searches more information that favors her prior belief or the consumer engages in “disconfirmatory” search under which she searches more information that disfavors her prior belief. In particular, the consumer conducts more disconfirmatory search when the information processing cost is low, while she conducts more confirmatory search when the cost is high. This suggests that “confirmatory bias” widely studied in psychology literature could be optimal behavior coming out of people optimizing attention to different types of information, especially when people has high information processing costs. Furthermore, a consumer's purchase likelihood may vary with her information processing cost in a non-monotonic way, depending on the consumer's prior belief and the utilities of buying a matched product and a mismatched product. Moreover, I show that when more information becomes available or credible, the consumer would increase attention to negative information when the prior utility of the product is high but she would increase attention to positive information when the prior utility is low. In terms of seller's strategies, I find that when the consumer has a low information processing cost, the seller would charge a relatively high price such that consumers always process information; but when the consumer has a high information processing cost, the seller would charge a relatively low price such that consumers purchase the product without any learning. The optimal price and profit would first decrease and then increase in consumer's information processing cost. In addition, offering the return policy induces the consumer to pay more attention to positive information and less attention to negative information, and the seller would offer the return policy except when the consumer has a very high information processing cost. Finally, when a seller can influence the information environment, he would have a lower incentive to suppress the negative information when the consumer has a lower prior belief about product fit. Moreover, a higher information processing cost for a consumer would increase or decrease a seller's incentive to suppress the negative information in the environment, depending on whether the seller can adjust the product price and whether the consumer has a high or low prior belief. Interestingly, the seller may charge a lower price when he can fully control the information environment than when he can not.

La liberté décisionnelle du médecin est une condition nécessaire de la pratique médicale, qui permet au praticien d’orienter sa pratique toute entière vers l’intérêt du patient. Cette orientation ne doit pas masquer l’asymétrie native de la relation médicale, déséquilibrée par la détention exclusive du savoir et du savoir-faire par le médecin. Le pouvoir médical issu de la connaissance est cependant borné par les droits dont le patient peut se prévaloir. C’est selon les termes de cette relation que se manifeste la liberté décisionnelle du médecin. La procédure de décision permet d’en assurer l’acceptabilité et de garantir le patient contre l’arbitraire, via les exigences de concertation et de motivation. Elle s’envisage dans une dimension plurielle conduisant à une décision systémique. Le contenu même de la décision s’analyse en termes de finalité et de pertinence. Elle a pour finalité la nécessité médicale, qui, au gré de désirs socialement consacrés et reconnus par le législateur, voit son champ d’élargir bien au-delà de la protection de la santé, au risque d’une instrumentalisation de la médecine. Sa pertinence est fondée sur la mobilisation d’outils de standardisation, dont les effets sont ambivalents sur la liberté décisionnelle, et qui constituent pour le juge un moyen privilégié de contrôle du bien-fondé de la décision. / The doctor's decision-making freedom is a necessary condition of medical practice, which allows the practitioner to direct his practice to the whole interest of the patient. This must not mask the native asymmetry of the medical relationship, unbalanced by the doctor’s exclusive possession of knowledge and expertise. However, the patient’s rights limit the medical power derived from knowledge. This is according to the terms of this relationship that the doctor's decision-making freedom comes out. The decision procedure ensures its acceptability and protects the patient against its arbitrariness, via the requirements for consultation and motivation. It is considered in a plural dimension leading to a systemic decision. The content of the decision is to be analysed in terms of purpose and relevance. Its purpose is medical necessity, which, at the option of socially devoted desires recognized by the law, sees its scope expanded beyond the protection of health, with a risk of instrumentalisation of medicine. Its relevance is based on the mobilization of standardization tools whose effects are ambivalent about the decision-making freedom, and which are a preferred means of control of the merits of the decision for the judge.

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Pre-existing dementia is associated with poorer functional outcome after stroke. It is unclear however whether this is due to lack of access to, or inequality in, stroke rehabilitation. This PhD used mixed methods to understand whether pre-existing dementia is a factor considered by clinicians when referring/admitting patients for rehabilitation, when providing rehabilitation interventions, and whether there is a difference in rehabilitation received by patients with and without pre-existing dementia. A background literature review informed the first study, which was a systematic review examining factors influencing clinical decision-making about access to stroke rehabilitation. The systematic review suggested that pre-stroke cognition influenced referrals/admission to rehabilitation, however, no studies examined this specifically. The qualitative study therefore used interviews (n=23) to explore clinicians experiences of decision-making about rehabilitation for patients with pre-existing dementia/cognitive impairments. The findings highlighted that clinicians own knowledge influenced their decision-making, with a common perception that people with pre-existing cognitive impairment lack potential to benefit from rehabilitation. The third study, a prospective cohort study, examined differences in rehabilitation received by patients with and without pre-existing cognitive impairments (n=139). People with pre-existing cognitive impairments received less rehabilitation than those without, particularly physiotherapy and referral to community therapies and more non-patient facing occupational therapy. This PhD identified that people with pre-existing dementia/cognitive impairment receive less rehabilitation when compared to those without. This may be, in part, due to clinicians decision-making about which patients should receive stroke rehabilitation. These findings have multiple clinical implications, particularly around the number of patients in stroke services with undiagnosed pre-existing cognitive impairment. Decisions can become more equitable by ensuring clinicians have access to relevant education, training and skills to work alongside patients with pre-existing dementia/cognitive impairments.