Economists understand that a fit for purpose policy regime requires a reliable general equilibrium model of the system in question and a well specified description of the objectives that the policymaker is trying to pursue. The current financial stability regime has neither and without these critical foundations the regime is fundamentally fragile and incomplete. There is no anchor on the conduct of policy, an absence in genuine accountability and, as a result, reputational risks for policy institutions.

Bayesian decision theory (BDT) is a mathematical framework that allows the experimenter to model ideal performance in a wide variety of visuomotor tasks. The experimenter can use BDT to compute benchmarks for ideal performance in such tasks and compare human performance to ideal. Recently, researchers have asked whether BDT can also be treated as a process model of visuomotor processing. It is unclear what sorts of experiments are appropriate to testing such claims and whether such claims are even meaningful. Any such claim presupposes that observers’ performance is close to ideal, and typical experimental tests involve comparison of human performance to ideal. We argue that this experimental criterion, while necessary, is weak. We illustrate how to achieve near-optimal performance in combining perceptual cues with a process model bearing little resemblance to BDT. We then propose experimental criteria termed transfer criteria that constitute more powerful tests of BDT as a model of perception and action. We describe how recent work in motor control can be viewed as tests of transfer properties of BDT. The transfer properties discussed here comprise the beginning of an operationalization (Bridgman, 1927) of what it means to claim that perception is or is not Bayesian inference (Knill & Richards, 1996). They are particularly relevant to research concerning natural scenes since they assess the ability of the organism to rapidly adapt to novel tasks in familiar environments or carry out familiar tasks in novel environments without learning.

In the Bayesian approach, the experience rated premium is the value which minimizes an expected loss with respect to a posterior distribution. The posterior distribution is conditioned on the claim experience of the risk insured, represented by a n-tuple of observations. An exact analytical calculation for the experience rated premium is possible under restrictive circumstances only, regarding the prior distribution, the likelihood function, and the loss function. In this article we provide an analytical asymptotic approximation as n → ∞ for the experience rated premium. This approximation can be obtained under more general circumstances, it is simple to compute, and it inherits the good accuracy of the Laplace approximation on which it is based. In contrast with numerical methods, this approximation allows for analytical interpretations. When exact calculations are possible, some analytical comparisons confirm the good accuracy of this approximation, which can even lead to the exact experience rated premium.

Current health economic literature does not provide clear guidelines on how uncertainty around cost-effectiveness estimates should be incorporated into economic decision models. Bayesian analysis is a promising alternative to classical statistics for incorporating uncertainty in economic analysis. Estimating a loss function that relates outcomes to societal welfare is a key component of Bayesian decision analysis. Health economists commonly compute the loss function based on the quality-adjusted life-years associated with each outcome. However, if welfare economics is adopted as the theoretical foundation of the analysis, a loss function based in cost-benefit analysis (CBA) may be more appropriate. CBA has not found wide use in health economics due to practical issues associated with estimating such a loss function. In this paper, we present a method based in conjoint analysis for estimating the CBA loss function that can be applied in practice. We illustrate the use of the methodology using data from a pilot study.

In most textbooks and papers that deal with the stochastic theory of life contingencies, the stochastic approach is restricted to the computation of expectations and higher order moments. For a wide class of insurances on a single life, we derive the distribution and the probability density function of the benefit and the loss functions. Both the continuous and the discrete case are considered.

The secretary problem refers to a certain class of optimal stopping problems based on relative ranks. To allow a more realistic formulation of the problem, this paper considers an arbitrary loss function. A finite and an infinite problem are defined and the optimal solutions are obtained. The solution for the infinite problem is given by a differential equation while the finite problem is given by a difference equation. Under general conditions, the finite problem tends to the infinite problem. An example involving the secretary problem with interview cost is considered and illustrates the usefulness of the present paper.