Probability and Research

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Probability and Research

• Predicting
• Results

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Probability

• Children are shown a puppet show.
• There are two puppet actors, Sally and Anne.
• Sally hides a marble in a basket, then leaves the
  room.
• While she is gone, Anne takes the marble from the
  basket and hides it in a box.
• Where will Sally look for her marble?

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Can a statistical model reliably predict that you
will buy the latest Harry Potter book, or add
brie to your shopping cart this week?
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• Most of economic theory presumes that decision
  makers are rational they correctly conceive of a
  well-defined set of alternatives, have
  well-defined preferences, and choose a best
  alternative.
• Psychologists, sociologists and political
  scientists believe that all action is
  fundamentally 'rational' in character and that
  people calculate the likely costs and benefits of
  any action before deciding what to do.
• This approach to theory is known as rational
  choice theory.

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Economic behavior is a fundamental component of
human nature. In particular, it is rooted in the
observation that all human beings have a natural
interest in behaving economically.

• Performance outcomeY is a function of factorsX
• Performance
• Outcome

Y f(x)
Factors Affecting Outcome Y
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The Challenge Identifying what factors affect
people performance!

• Performance Factors

Knowledge Information Research
Policy Organizational Behavior
Skills Performance
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One way of doing this is by introducing to your
methodology Theoretical Paradigms, Conceptual
Designs, Prototypes, Precedents, Exampes
and/orModels
Quality and Efficiency
Voluntary Association
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Economic models serve to simplify data, to
forecast probable economic activity and to
demonstrate best policy choices.
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Models can provide a scheme to demonostrate your
knowledge of the ideal organizational
operations/structures.
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This particular model is based on Adam Smith It
is mostly used as an economic model but as you
can imagine has implications for Social
Responsibility.
Customer Satisfaction
TransparencyOpen and Honest Exchange of
Information
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It is not usually applied to IR but does have
implications for freedom, rights and democracy.
Improved economic and social services
An increase in freedom Freedom of Association
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It is helpful to your commitee if you create such
a model yourself or use one that is established
as a precedent.
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The Bar Chart is another popular way of
displaying your basic research methodology.
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Flow Charts are also very effective models.
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Mean (average), Median (most scores were equally
above and below this point, Norm (most frequent
scores).
Norm Distribution
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In economics rational behavior means that
individuals maximize utility under the
constraints they face.
Initially students have always thought of
negotiating as like a tug of war! In other words
they think of negotiating as an effort to
maximize utility.
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Utilility can be hard to dispute because it often
means the greatest good for the greatest number
of people. Some will get hurt but the utility
benefits outweigh the utiliity costs.We
sometimes use the Ford motor company as an
ethical example of using this type of model.
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As anticipated some cars suffered the defect by
exploding into flames.
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11 x 12.5 million autos137 million

• Probability
• Statistical probability showed that solving the
  defect could save 180 deaths (and/or as many
  serious injuries) it could also prevent 2100
  vehicles from burning. However the total
  savings from the prevention would be 49.15
  million dollars. Ford estamated-on the basis of
  utility-that is was not worth it to spend 137
  million to save a possible cost of 49.15
  million. The took the risk and produced the car
  with the defects.

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Another paradigm for negotiating is Game Theory
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Game Theory
Player B
Maximize Individual Gain
Create Mutual Benefit

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2
Create Mutual Benefit
6
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Player A
8
2
Maximize Individual Gain
2
2
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Game Theory has serious implications not only for
business but also for IR.

• Cooperation creates more benefits, refusal to
  cooperate creates momre threats.

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Russia tests new ballistic missile
NATO has thoughts of bringing their Missile
Defense System to Eastern Europe. It is a complex
and ever evolving web of interlinked weapons and
radar based on land, sea, air and in space.
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The international interactionsand politicies we
observe at the macro-level (e.g., wars, trade,
terrorism) are driven by factors, events and
decisions that occur at the micro-level (e.g., in
war elite decision-making, domestic politics,
culture, state alliances, and so on).

• The tool that political scientists use to make
  sense of this complexity is modeling.
• One such popular model is Game Theory.
• You may have heard of game theory if you have
  seen the movie A Beautiful Mind, a biographical
  account of an important game theorist, John Nash,
  or if you have ever watched the TV show Numbers,
  in which Charlie (Professor of Mathematics) helps
  his brother Don (FBI agent) solve crimes using
  mathematical models or game theory.

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IR also assumes strategic interactions among
rational actors, who are trying to act according
to how they think their counterparts will act
and/or react.

• Within every society culturally defined
  principles of justice and law serve to generate
  internationally consistent expectations of how
  political games are played and these coordinating
  principles are strengthened by the assummption
  that they are socially constructed to be in
  harmony with (universal) natural law.

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Game Theory Methodology

• Game theory methodology assumes that
  international transactions involves a group of
  individuals (whom we call players).
• Each players actions can be predicted on the
  basis of probability theory.
• However predictions are determined on the basis
  of deciding whether or not statees (autonomous
  regions) will act on the basis of interests,
  policy (treaty) or cultural values.

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Understanding Consumer Behavior
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The Psychology of Consumer Behavior

• The Problem
• What markets are you trying to reach and what
  will attract their interests/attention.
• What media would reach them most efficiently?

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The SolutionConsumer Psychology

• Survey.   Interview to collect informatioin about
  attitudes, opinions, experiences, perceptions and
  behaviors which are suspected to relate in some
  way to your business interests.  Getting the
  right questions, and asking them in the right way
  is pivotal - and especially difficult.
• Statistical analysis.  There are many strategies
  for isolating segments from each other and
  demonstrating the connection. 
• Psychological profiling.  It is one thing to
  discover that certain groups of individuals give
  similar responses on certain key questions in a
  survey.   It is quite another to figure out who
  these people really are what the underlying
  psychology is that makes them think and feel and
  act as they do. creators.  To make profiles that
  accurately reflect the segments, while making
  them "come alive" as people,  takes a lot of
  creeativity, art and science.