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Adaptive Bayesian Learning with Action and State-Dependent Signal Variance

Kaiwen Hou

arXiv 20 Nov 2023 · Statistics — Methodology

arXiv:2311.12878 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This manuscript presents an advanced framework for Bayesian learning by incorporating action and state-dependent signal variances into decision-making models. This framework is pivotal in understanding complex data-feedback loops and decision-making processes in various economic systems. Through a series of examples, we demonstrate the versatility of this approach in different contexts, ranging from simple Bayesian updating in stable environments to complex models involving social learning and state-dependent uncertainties. The paper uniquely contributes to the understanding of the nuanced interplay between data, actions, outcomes, and the inherent uncertainty in economic models.

Citation extraction

28
references
33
in-text mentions
28
distinct cited
0
self-citations
2,600
main-text words

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Orlik, A. and Veldkamp, L (2014) Understanding uncertainty shocks and the role of black swans0.81142100%
2Ang, A. and Bekaert, G (2002) Regime switches in interest rates0.51121100%
3Veldkamp, L. L (2023) Information choice in macroeconomics and finance0.51121100%
4Baley, I. and Veldkamp, L (2023) Bayesian learning0.40511100%
5Bekaert, G., Hodrick, R. J., and Marshall, D. A (2001) Peso problem explanations for term structure anomalies0.40511100%
6Bergemann, D. and Valimaki, J (2006) Bandit problems0.40511100%
7Bikhchandani, S., Hirshleifer, D., and Welch, I (1998) Learning from the behavior of others: Conformity, fads, and informational cascades0.40511100%
8Black, F (1976) Studies of stock market volatility changes0.40511100%
9Christie, A. A (1982) The stochastic behavior of common stock variances: Value, leverage and interest rate effects0.40511100%
10Daly, M (2018) Feasible portfolios under tracking error, $$, $$ and utility constraints0.40511100%

Showing the top 10 of 28 scored citations.