To save content items to your account,
please confirm that you agree to abide by our usage policies.
If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account.
Find out more about saving content to .
To save content items to your Kindle, first ensure no-reply@cambridge.org
is added to your Approved Personal Document E-mail List under your Personal Document Settings
on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part
of your Kindle email address below.
Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations.
‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi.
‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
In a close replication study of Darcy et al., (2016), Huensch (2024) reported a lack of clear relationships between inhibitory control (IC) and phonological processing, contrary to the initial findings. Given the general unreliability of response-time differences, which are often the basis of IC measures and could potentially mask small effects, we performed secondary analyses on Huensch’s (2024) open data set to investigate (a) the extent to which the reliability of IC measures could be improved using model-based approaches (Hui & Wu, 2024), (b) the correlations between the different IC tasks, and (c) their predictive power for phonological processing, based on the more reliable indices. Results showed that model-based approaches generally improved reliability, and particularly for the Stroop and Simon tasks to acceptable levels. Yet, correlations between IC tasks remained low, and partial correlation and hierarchical regression still failed to reveal significant relationships between IC and phonological processing, further confirming Huensch’s (2024) findings.
I explore and defend the unusual view that the replacement of matter taking place in the human body undermines egoistic reasons, and that we therefore have little or no basis for long-term egoistic concern. I begin by arguing that you should not have egoistic concern for a replica, i.e. a person resulting from a complete and sudden replacement of matter. I then argue that when it comes to egoistic concern, replication is not relevantly different from the slower and more gradual form of replacement found in human metabolism: if the former undermines egoistic reasons, so does the latter. I grant that the resulting view is, in some respects, hard to accept, but I conclude that we should at least treat it as a serious possibility.
This is a masters-level overview of the mathematical concepts needed to fully grasp the art of derivatives pricing, and a must-have for anyone considering a career in quantitative finance in industry or academia. Starting from the foundations of probability, this textbook allows students with limited technical background to build a solid knowledge of the most important principles. It offers a unique compromise between intuition and mathematics, even when discussing abstract ideas such as change of measure. Mathematical concepts are introduced initially using toy examples, before moving on to examples of finance cases, both in discrete and continuous time. Throughout, numerical applications and simulations illuminate the analytical results. The end-of-chapter exercises test students' understanding, with solved exercises at the end of each part to aid self-study. Additional resources are available online, including slides, code and an interactive app.
We introduce derivative securities and ask ourselves how to determine their price from a financial perspective. We discover that the cashflow of zero-coupon bonds and forward contracts can be artificially replicated by adopting a static trading strategy featuring primary assets. With almost no math, we obtain the central result that every product whose payoff is a linear function of the future price of tradeable products can be computed without relying on any model. The story is different for products whose payoff is a non-linear function of the future price of assets, such as European calls and puts. In such cases, pricing by replication may still be possible, but is more complex but it requires a model and features a dynamic replicating strategy, evolving through time. We use the law of one price to give a clear interpretation to the no-arbitrage price of derivatives. We conclude the chapter with the general expression of a derivative’s price, given by the risk-neutral expectation of its payoff discounted at the risk-free rate. The purpose of the book is to introduce all the concepts needed to understand why and when this result holds, and how it can be evaluated in practice.
We study the application of the Cox-–Ross–Rubinstein model to pricing financial contracts. The determination of the “fair price” consists in looking for an adapted self-financing trading strategy replicating the payoff of the product at hand, and determining the amount needed to launch this procedure. We observe that the mathematical expression of this price takes the form of the conditional expectation of the payoff discounted at the risk-free rate provided that one considers a specific set of probabilities when computing the expectation. This amounts to computing the expectation under a special probability measure (called risk-neutral measure) equivalent to – but different from – the physical probability measure. We show that the risk-neutral measure has the specific property that the price process of assets paying no cashflows are martingales when discounted at the risk-free rate. We illustrate using zero-coupon bonds, forward contracts, and European options that the price found by computing the risk-neutral expectation indeed enables us to start a self-financing strategy that replicates the payoff of those products on a binomial tree.
We derive a deterministic equation whose solution yields the expression of the no-arbitrage price of a derivative security in continuous time. In contrast to Chapter 11 where the latter is found via a risk-neutral expectation, we adopt a no-arbitrage argument as in Chapter 15. To this end, we look for a trading strategy that would (i) be self-financing, (ii) comply with the evolution of a function which only depends on time and on the current price of the underlying asset, and (ii) replicate the derivative’s payoff. Solving this problem yields (i) a partial differential equation (PDE) whose solution is the price function and (ii) the analytical expression of the replicating strategy, something that we failed to obtain in Chapter 11. We show that the price of ZCBs, forward contracts and European call and put options computed using risk-neutral expectations all satisfy the PDE. The price of a specific product is determined by picking the price function that complies with its payoff. The Feynman–Kac theorem justifies that the price found using the risk-neutral expectation approach in Chapter 11 coincides with the no-arbitrage expression obtained by following a replication argument.
Recently, social science research replicability has received close examination, with discussions revolving around the degree of success in replicating experimental results. We lend insight to the replication discussion by examining the quality of replication studies. We examine how even a seemingly minor protocol deviation in the experimental process (Camerer et al. in Science 351(6280):143–1436, 2016. https://doi.org/10.1126/science.aaf0918), the removal of common information, can lead to a finding of “non-replication” of the results from the original study (Chen and Chen in Am Econ Rev 101(6):2562–2589, 2011). Our analysis of the data from the original study, its replication, and a series of new experiments shows that, with common information, we obtain the original result in Chen and Chen (2011), whereas without common information, we obtain the null result in Camerer et al. (2016). Together, we use our findings to propose a set of procedure recommendations to increase the quality of replications of laboratory experiments in the social sciences.
We replicate the strategy-method experiment by Fischbacher et al. (Econ. Lett. 71:397-404, 2001) developed to measure attitudes towards cooperation in a one-shot public goods game. We collected data from 160 students at four different universities across urban and rural Russia. Using the classification proposed by Fischbacher et al. (2001) we find that the distribution of types is very similar across the four locations. The share of conditional cooperators in our Russian subject pools is comparable to the one found by Fischbacher et al. in a Swiss subject pool. However, the distribution of the other types differs from the one found in Switzerland.
Are female hurricanes more deadly? In this chapter we demonstrate multiverse analysis using analytical inputs from many scholars in a high-profile empirical debate. In results from more than 10,000 model specifications, only 12 percent of estimates are statistically significant and 99 percent are smaller in magnitude than what the original authors reported. Multiverse analysis shows that some published findings are extremely weak and nonrobust.
Multiverse analysis is not simply a computational method but also a philosophy of science. In this chapter we explore its core tenets and historical foundations. We discuss the foundational principle of transparency in the history of science and argue that multiverse analysis brings social science back into alignment with this core founding ideal. We make connections between this framework and multiverse concepts developed in cosmology and quantum physics.
Why do different models give different results? Which modeling assumptions matter most? These are questions of model influence. Standard regression results fail to address simple questions like, which control variables are important for getting this result? In this chapter we lay out a framework for thinking about influence and draw on empirical examples to illustrate. When a result is not fully robust, the influence analysis provides methodological explanations for the failure of robustness. These explanations can be considered methodological scope conditions – they explain why a hypothesis can be supported in some cases but not in others. We also show how multiverse results can help inform the method of sensitivity analysis
Do external threats increase American bipartisanship? We subject this question to an experimental test. Leveraging the Biden and Trump administrations’ similar characterization of the China threat, we exposed American respondents to real-world primes about security threats from China, while randomizing the messenger of such primes. We find that the threat primes—regardless of the partisan identity of their messenger—boosted Democrats’ and Republicans’ support for assertive foreign policy in a largely parallel manner, thereby failing to reduce preference polarization. Importantly, there were no measurable changes across multiple indicators of affective polarization. These findings clarify the limits of external threats in uniting Americans, while also challenging recent perspectives that external threats—often colored by elite rhetoric—will further polarize the American public.
We replicate Meissner (Exp Econ 19:281–298, 2016), where debt aversion was reported for the first time in an intertemporal consumption and saving problem. While Meissner (2016) uses a German sample, our participants are US undergraduate students. All of the original study’s main findings replicate with similar effect sizes. Additionally, we extend the original analysis by introducing a new individual index of debt aversion, which we use to compare debt aversion across countries. Interestingly, we find no significant differences in debt aversion between the original German and the new US sample. We then test whether debt aversion correlates with individual characteristics such as gender, cognitive reflection ability, and risk aversion. Overall, this paper confirms the importance of debt aversion in intertemporal consumption and saving problems and validates the approach of Meissner (2016).
This study is a conceptual replication of Kelley & Schmeichel (PLOS ONE 10: e0144228, 2015), which found that thinking about death reduces delay discounting. Unlike the original study, the current study was conducted in an environment where there was a real and tangible mortality threat across the world, that is, COVID-19. Contrary to the findings of the original study, results of the current study revealed that thinking about death increases delay discounting, such that participants who were primed with death thoughts traded “₺200 now” for “₺342.35 three months later,” whereas those in the control condition traded “₺200 now” for “₺319.27 three months later”. The current study also explored the moderating roles of goal orientation and self-esteem in the effect of mortality salience on delay discounting; however, it failed to provide evidence for the moderating roles of these variables.
We test whether anchoring affects people’s elicited valuations for a bottle of wine in individual decision-making and in markets. We anchor subjects by asking them if they are willing to sell a bottle of wine for a transparently uninformative random price. We elicit subjects’ Willingness-To-Accept for the bottle before and after the market. Subjects participate in a double auction market either in a small or a large trading group. The variance in subjects’ Willingness-To-Accept shrinks within trading groups. Our evidence supports the idea that markets have the potential to diminish anchoring effects. However, the market is not needed: our anchoring manipulation failed in a large sample. In a concise meta-analysis, we identify the circumstances under which anchoring effects of preferences can be expected.
We develop a formal framework for accumulating evidence across studies and apply it to develop theoretical foundations for replication. Our primary contribution is to characterize the relationship between replication and distinct formulations of external validity. Whereas conventional wisdom holds that replication facilitates learning about external validity, we show that this is not, in general, the case. Our results show how comparisons of the magnitude or sign of empirical findings link to distinct concepts of external validity. However, without careful attention to the research design of constituent studies, replication can mislead efforts to assess external validity. We show that two studies must have essentially the same research designs, i.e., be harmonized, in order for their estimates to provide information about any kind of external validity. This result shows that even minor differences in research design between a study and its replication can introduce a discrepancy that is typically overlooked, a problem that becomes more pronounced as the number of studies increases. We conclude by outlining a design-driven approach to replication, which responds to the issues our framework identifies and details how a research agenda can manage them productively.
We provide evidence on the extent to which survey items in the Preference Survey Module and the resulting Global Preference Survey measuring social preferences—trust, altruism, positive and negative reciprocity—predict behavior in corresponding experimental games outside the original participant sample of Falk et al. (Manag Sci, 2022. https://doi.org/10.1287/mnsc.2022.4455). Our results, which are based on a replication study with university students in Tehran, Iran, are mixed. While quantitative items considering hypothetical versions of the experimental games correlate significantly and economically meaningfully with individual behavior, none of the qualitative items show significant correlations. The only exception is altruism where results correspond more closely to the original findings.
This paper reports data from three subject pools (n = 717 subjects) using techniques based on those of Loewenstein et al. (J Personal Soc Psychol 57:426–441, 1989) and Blanco et al. (Games Econ Behav 72:321–338, 2011) to obtain parameters, respectively, of stated and revealed inequality aversion. We provide a replication opportunity for those papers, with two innovations: (1) a design which allows stated and revealed preferences to be compared at the individual level; (2) assessment of robustness of findings across subjects from a UK university, a Turkish university and Amazon Mechanical Turk. Our findings on stated aversion to inequality are qualitatively similar to those of Loewenstein et al. in each of our subject pools, whereas there are notable differences between some of our findings on revealed preference and those of Blanco et al. We find that revealed advantageous inequality aversion is often stronger than revealed dis-advantageous inequality aversion. In most subject pools, we find some (weak) correlation between corresponding parameters of stated and revealed inequality aversion.
The replication crisis across several disciplines raises challenges for behavioural sciences in general. In this report, we review the lessons for experimental economists of these developments. We present the new research methods and practices which are being proposed to improve the replicability of scientific studies. We discuss how these methods and practices can have a positive impact in experimental economics and the extent to which they should be encouraged.
This paper investigates risk preferences using an artefactual field experiment conducted with a non-standard subject pool of farmers in Ghana. I introduce an alternative methodology for studying preferences following replication of a seminal risk elicitation procedure by Binswanger (Am J Agric Econ 62(3):395407, 1980). An important feature of both approaches is that they are easy to understand and, hence, are particularly suitable for eliciting preferences among subjects with low levels of formal education. I successfully replicate Binswanger's study, documenting how his original result of the moderate level of risk aversion for an average farmer can be generalized to a different country. However, using my alternative approach, whereby lotteries are presented in the loss domain, I find that half of my experimental subjects violated expected utility theory. This approach is of relevance to the current literature on studying risk preferences among subjects with poor literacy skills.