Can forbidden zones for the expectation explain noise influence in behavioral economics and decision sciences?

Harin, Alexander (2017): Can forbidden zones for the expectation explain noise influence in behavioral economics and decision sciences?

Abstract

The present article is devoted to discrete random variables that take a limited number of values in finite closed intervals. I prove that if non-zero lower bounds exist for the variances of the variables, then non-zero bounds or forbidden zones exist for their expectations near the boundaries of the intervals. This article is motivated by the need in rigorous theoretical support for the analysis of the influence of scattering and noise on data in behavioral economics and decision sciences.

• Item Type: MPRA Paper
• Language: English
• Keywords: probability; dispersion; variance; noise; economics; utility theory; prospect theory; behavioral economics; decision sciences
• Subjects: C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations ; Speculations

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