Wednesday, September 15, 2010

a rational view of superstition

I. A baseline model of superstition
superstition, that is common,. for example, people in China do not want to write will, because they fear that the fact that they write will may cause death. In other words, superstition is a belief that action A will cause event B (event B is an undesirable thing). This causality need not be absolute. More formally, let's suppose the probability that B will take place is f(x,y), where x is a vector denoting all other relevant aspects of life, while y takes on value about action A. y can take on only two values 0 and 1 (1 means making action A, and 0 not) in this case. and for any x0, f(x0,0)II.Extension of the model
This is the basic model of superstition, however it is incomplete and naive in that it assumes no dynamics and adaptation or expectation. People's belief does evolve. People is not always 100% sure about the superstition. From now on, I will only look at the continuous case, and the result can be easily generalized to discrete case. There two possibilities--1) superstition is true. 2) superstition is false. There are different probabilities involved. Here I take Baysian view of probability. People adapt this belief with the actual data.
III. A complete model of choice under the influence of superstition
1. action A-->event B (desirable)
to be added (key:cost of A)
2. action A-->event B(undesirable)
to be added
IV.Example and explanation (to be revised)
Suppose that superstition goes that action A leads to event B (undesirable). If that superstition is rampant in that region, then it is likely that people will have a a priori distribution favoring the superstition is true. Because people is risk-averse, people are not likely to make action A. Thus there will be few data and people with this superstition cannot update their belief. thus that superstition may continue. Even in the presence of data, incomplete information (non-dissemination, distortion) and wrong interpretation ( guilt of association, causality vs. association) may fail to dispute the superstition.
(why superstition are prevalent?)
V. Afterword
This is just a small game with behavioral economics. I love economics, maths and so forth not because I like the manipulation of numbers and functions, but rather, they leads to a nice way of looking at the world. It is fun and that is all that matters.

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