A Revised Framework for the Investigation of Expectation Update Versus Maintenance in the Context of Expectation Violations: The ViolEx 2.0 Model

Expectations are probabilistic beliefs about the future that shape and influence our perception, affect, cognition, and behavior in many contexts. This makes expectations a highly relevant concept across basic and applied psychological disciplines. When expectations are confirmed or violated, individuals can respond by either updating or maintaining their prior expectations in light of the new evidence. Moreover, proactive and reactive behavior can change the probability with which individuals encounter expectation confirmations or violations. The investigation of predictors and mechanisms underlying expectation update and maintenance has been approached from many research perspectives. However, in many instances there has been little exchange between different research fields. To further advance research on expectations and expectation violations, collaborative efforts across different disciplines in psychology, cognitive (neuro)science, and other life sciences are warranted. For fostering and facilitating such efforts, we introduce the ViolEx 2.0 model, a revised framework for interdisciplinary research on cognitive and behavioral mechanisms of expectation update and maintenance in the context of expectation violations. To support different goals and stages in interdisciplinary exchange, the ViolEx 2.0 model features three model levels with varying degrees of specificity in order to address questions about the research synopsis, central concepts, or functional processes and relationships, respectively. The framework can be applied to different research fields and has high potential for guiding collaborative research efforts in expectation research.

Self-Fulfilling Prophecies

Causal loops are a recurring feature in the philosophy of time travel, where it is generally agreed that they are logically possible but may come with a theoretical cost. This paper introduces an unfamiliar set of causal loop cases involving knowledge or beliefs about the future: self-fulfilling prophecy loops (SFP loops). I show how and when such loops arise and consider their relationship to more familiar causal loops.

A revised framework for the investigation of expectation update versus maintenance in the context of expectation violations: the ViolEx 2.0 model

Expectations are probabilistic beliefs about the future that shape and influence our perception, affect, cognition, and behaviour in many contexts. This makes expectations a highly relevant concept across basic and applied psychological disciplines. When expectations are confirmed or violated, individuals can respond by either updating or maintaining their prior expectations in light of the new evidence. Moreover, proactive and reactive behaviour can change the probability with which individuals encounter expectation confirmations or violations. The investigation of predictors and mechanisms underlying expectation update and maintenance has been approached from many research perspectives, however, in many instances with little exchange between different research fields. To further advance research on expectations and expectation violations, collaborative efforts across different disciplines in psychology, cognitive (neuro)science, and other life sciences are warranted. For fostering and facilitating such efforts, we introduce the ViolEx 2.0 model, a revised framework for interdisciplinary research on cognitive and behavioural mechanisms of expectation update and maintenance in the context of expectation violations. To support different goals and stages in interdisciplinary exchange, the ViolEx 2.0 model features three model levels with varying degrees of specificity in order to address questions about the research synopsis, central concepts, or functional processes and relationships, respectively. The framework can be applied to different research fields and has high potential for guiding collaborative research efforts in expectation research.

Pandemics and Inequality

This paper uses an individual-level survey conducted by the Edelman Trust Barometer in mid-April for 11 advanced and emerging market economies to examine perceptions of government performance in managing the health and economic crisis, beliefs about the future, and attitudes about redistribution. We find that women, non-college educated, the unemployed, and those in non-teleworkable jobs systematically have less favorable perceptions of government responses. Personally experiencing illness or job loss caused by the pandemic can shape people’s beliefs about the future, heightening uncertainties about prolonged job losses, and the imminent threat from automation. Economic anxieties are amplified in countries that experienced an early surge in infections followed by successful containment, suggesting that negative beliefs can persist. Support for pro-equality redistributive policies varies, depending on personal experiences and views about the poor. However, we find strong willingness to provide social safety nets for vulnerable individuals and firms by those who have a more favorable perception of government responses, suggesting that effective government actions can promote support for redistributive policies.

Coin trials

According to the JUSTIFIED FAIR COINS principle, if I know that a coin is fair, and I lack justification for believing that it won’t be flipped, then I lack justification for believing that it won’t land tails. What this principle says, in effect, is that the only way to have justification for believing that a fair coin won’t land tails, is by having justification for believing that it won’t be flipped at all. Although this seems a plausible and innocuous principle, in a recent paper Dorr, Goodman and Hawthorne use it in devising an intriguing puzzle which places all justified beliefs about the future in jeopardy. They point out, further, that one very widespread theory of justification predicts that JUSTIFIED FAIR COINS is false, giving us additional reason to reject it. In this paper, I will attempt to turn this dialectic around. I will argue that JUSTIFIED FAIR COINS does not inevitably lead to scepticism about the future, and the fact that it is incompatible with a widespread theory of justification may give us reason to doubt the theory. I will outline an alternative theory of justification that predicts both that JUSTIFIED FAIR COINS is true and that we have justification for believing much about the future.

Becoming Politicized

This research took place just after the end of the protests following the killing of a 16-year-old boy by a policeman in Greece in December 2008. Participants (N = 224) were 16-year-olds in different schools in Attiki. Informed by the Politicized Collective Identity Model ( Simon & Klandermans, 2001 ), a questionnaire measuring grievances, adversarial attributions, emotions, vulnerability, identifications with students and activists, and questions about justice and Greek society in the future, as well as about youngsters’ participation in different actions, was completed. Four profiles of the participants emerged from a cluster analysis using representations of the conflict, emotions, and identifications with activists and students. These profiles differed on beliefs about the future of Greece, participants’ economic vulnerability, and forms of participation. Importantly, the clusters corresponded to students from schools of different socioeconomic areas. The results indicate that the way young people interpret the events and the context, their levels of identification, and the way they represent society are important factors of their political socialization that impacts on their forms of participation. Political socialization seems to be related to youngsters’ position in society which probably constitutes an important anchoring point of their interpretation of the world.

ROBUST TRADING OF IMPLIED SKEW

In this paper, we present a method for constructing a (static) portfolio of co-maturing European options whose price sign is determined by the skewness level of the associated implied volatility. This property holds regardless of the validity of a specific model — i.e. the method is robust. The strategy is given explicitly and depends only on one’s beliefs about the future values of implied skewness, which is an observable market indicator. As such, our method allows the use of existing statistical tools to formulate the beliefs, providing a practical interpretation of the more abstract mathematical setting, in which the beliefs are understood as a family of probability measures. One of the applications of the results established herein is a method for trading one’s views on the future changes in implied skew, largely independently of other market factors. Another application of our results provides a concrete improvement of the model-independent super-replication and sub-replication strategies for barrier options proposed in [H. Brown, D. Hobson & L. C. G. Rogers (2001) Robust hedging of barrier options, Mathematical Finance 11 (3), 285–314.], which exploits the given beliefs on the implied skew. Our theoretical results are tested empirically, using the historical prices of S&P 500 options.