Reference Class Forecasting and Machine Learning for Improved Offshore Oil and Gas Megaproject Planning: Methods and Application

This article develops and describes rigorous oil and gas project forecasting methods. First, it builds a theoretical foundation by mapping megaproject performance literature to these projects. Second, it draws on heuristics and biases literature, using a questionnaire to demonstrate forecasting-related biases and principal-agent issues among industry project professionals. Third, it uses methodically collected project performance data to demonstrate that overrun distributions are non-normal and fat-tailed. Fourth, reference-class forecasting is demonstrated for cost and schedule uplifts. Finally, a predictive approach using machine learning (ML) considers project-specific factors to forecast the most likely cost and schedule overruns in a project.

Radiophobia - useful concept or ostracising term?

The term ‘radiophobia’ has been a cornerstone in much of the nuclear discourse over the past 70 years and has been used extensively by proponents of nuclear technologies to dismiss fears of radiation as being emotional overreactions to a risk that is actuarially very low, and that this stems from public ignorance. Despite its longevity in nuclear discourse, little attention has been afforded to the term, its history, and the factors that underpin the extreme divergence in risk perception that the term de facto refers to, threatening to severely hamper any efforts to redress said divergence. This article will explore these factors, mostly sociopsychological in nature, and conclude that the powerful affective imagery associated with radiation, compounded by various heuristics and biases, renders public discomfort with ionising radiation from nuclear power plants rational – despite the fact nuclear energy is actuarially the safest energy source available. The article will note that whilst its often ostracising usage towards the public should render the term obsolete, radiophobia can still be regarded as a useful concept to try and explain the extreme risk perception divergence that exists between nuclear experts and the public. This would, however, require a paradigm shift that acknowledges the complex historical and sociopsychological factors that have shaped radiation into becoming a uniquely feared process. Such an acknowledgement will likely be a prerequisite for any efforts towards normalising humanity’s relationship with radiation, and would require considerable changes in communication practices.

Conflict Detection Predicts the Temporal Stability of Intuitive and Deliberate Reasoning

Although the susceptibility to reasoning biases is often assumed to be a stable trait, the temporal stability of people’s performance on popular heuristics-and-biases tasks has been rarely directly tested. The present study addressed this issue and examined a potential determinant for answer change. Participants solved the same set of “bias” tasks twice in two test sessions, two weeks apart. We used the two-response paradigm to test the stability of both initial (intuitive) and final (deliberate) responses. We hypothesized that participants who showed higher conflict detection in their initial intuitive responses at session 1 (as indexed by a relative confidence decrease compared to control problems), would be less stable in their responses between session 1 and 2. Results showed that performance on the reasoning tasks was highly, but not entirely, stable two weeks later. Notably, conflict detection in session 1 was significantly more pronounced in those cases that participants did change their answer between sessions. We discuss practical and theoretical implications.

Behavioral Economics and Court Decision-Making

The economic analysis of law assumes that court decisions are key to incentivizing people and maximizing social welfare. This article reviews the behavioral literature on court decision making, and highlights numerous heuristics and biases that impact judges and jurors and cause them to make decisions that diverge from the social optimum. In light of this review, the article analyzes some of the institutional features of the court system that may help minimize the costs of biased decisions in the courts.

Cognitive Biases: Mistakes or Missing Stakes?

Despite decades of research on heuristics and biases, evidence on the effect of large incentives on cognitive biases is scant. We test the effect of incentives on four widely documented biases: base-rate neglect, anchoring, failure of contingent thinking, and intuitive reasoning. In laboratory experiments with 1,236 college students in Nairobi, we implement three incentive levels: no incentives, standard lab payments, and very high incentives. We find that very high stakes increase response times by 40% but improve performance only very mildly or not at all. In none of the tasks do very high stakes come close to de-biasing participants.

The effect of behavioral biases on financial decisions

Financial management decisions are made by people, and people, in all instances, are shaped by their behavioral traits. Here we provide extensive insight on the theoretical and empirical analysis made on cognitive biases and their influence on financial decisions. To provide a systematic exposition, we set three broad categories: heuristics and biases, choices (including framing and preferences) and social factors. We then describe the main biases within each category and provide an extensive revision of the main theoretical and empirical developments about their impact on financial decisions.

The Psychology of Intellectual Property

The success of intellectual property (IP) systems depends on their ability to influence human behaviour in relation to creativity and innovation. Understanding how people react to and are influenced by intellectual property systems is therefore critical to their design. The psychology of intellectual property is an area rich with opportunities for further exploration using various research methodologies. In particular, this is a field where human subjects research on the design and implementation of intellectual property systems can be of great value. Such approaches can include both laboratory and field experimental designs, and qualitative and quantitative methodologies. The chapter explores these approaches through a survey of research on three broad areas where human psychology plays an outsized role in intellectual property systems: heuristics and biases in intellectual property law, whether and how intellectual property laws motivate creativity, and popular understanding of intellectual property law.