SCEPA and INET are proud to present an online economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students.
Class 03: Applications of the Entropy-Constrained Behavior Model
At the beginning, the audience is presented with a detailed review of the entropy constrained behavior model, emphasizing on the description of the behavior temperature. Many important points are clarified, such as if the behavior temperature of people tends to be the same or if a fluctuation in behavior temperature changes the utility function, as well as how much will one’s behavior temperature would be affected if a tiger would appear in front of them! Moreover, in this lecture Gibbs distribution is examined more thoroughly. Afterwards, a definition of the expected utility theory is presented by using Von Neumann and Morgenstern’s lottery paradigm. Duncan Luce and Patrick Suppes attempt to experimentally prove the main point of the expected utility theory. However, the experiment did not show the sharp-step function behavior predicted by the expected utility theory. Thus, their experiment seems more precise with the use of the entropy behavior theory, where a choice with a greater payoff is just more plausible to occur. Additionally, some more mathematical applications are explained. In the end, the conversation zooms in the Gaussian method of analysis, which he uses in order to describe his foundation of normal distribution. The third lecture ends raising the question if the Gaussian method in astronomy works as well in social science.
Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 03 Applications of the Entropy Constrained Behavior Model | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Spring 2016