Professional Documents
Culture Documents
Next Up
1.
2.
3.
Breakeven Price
Breakeven Point - BEP
Last In, First Out - LIFO
4.
Fixed Cost
5.
Empiricism
From Wikipedia, the free encyclopedia
Jump to: navigation, search
This article is about the field of philosophy. For the album by Borknagar, see
Empiricism (album).
Empiricism is a theory that states that knowledge comes only or primarily from sensory
experience.[1] One of several views of epistemology, the study of human knowledge, along
with rationalism and skepticism, empiricism emphasizes the role of experience and evidence,
especially sensory experience, in the formation of ideas, over the notion of innate ideas or
traditions;[2] empiricists may argue however that traditions (or customs) arise due to relations
of previous sense experiences.[3]
Empiricism in the philosophy of science emphasizes evidence, especially as discovered in
experiments. It is a fundamental part of the scientific method that all hypotheses and theories
must be tested against observations of the natural world rather than resting solely on a priori
reasoning, intuition, or revelation.
Empiricism, often used by natural scientists, says that "knowledge is based on experience"
and that "knowledge is tentative and probabilistic, subject to continued revision and
falsification."[4] One of the epistemological tenets is that sensory experience creates
knowledge. The scientific method, including experiments and validated measurement tools,
guides empirical research.
Regression analysis
From Wikipedia, the free encyclopedia
Jump to: navigation, search
Game theory is "the study of mathematical models of conflict and cooperation between
intelligent rational decision-makers."[1] Game theory is mainly used in economics, political
science, and psychology, as well as logic, computer science, biology and poker.[2] Originally,
it addressed zero-sum games, in which one person's gains result in losses for the other
participants. Today, game theory applies to a wide range of behavioral relations, and is now
an umbrella term for the science of logical decision making in humans, animals, and
computers.
Modern game theory began with the idea regarding the existence of mixed-strategy equilibria
in two-person zero-sum games and its proof by John von Neumann. Von Neumann's original
proof used Brouwer fixed-point theorem on continuous mappings into compact convex sets,
which became a standard method in game theory and mathematical economics. His paper was
followed by the 1944 book Theory of Games and Economic Behavior, co-written with Oskar
Morgenstern, which considered cooperative games of several players. The second edition of
this book provided an axiomatic theory of expected utility, which allowed mathematical
statisticians and economists to treat decision-making under uncertainty.
This theory was developed extensively in the 1950s by many scholars. Game theory was later
explicitly applied to biology in the 1970s, although similar developments go back at least as
far as the 1930s. Game theory has been widely recognized as an important tool in many
fields. With the Nobel Memorial Prize in Economic Sciences going to game theorist Jean
Tirole in 2014, eleven game-theorists have now won the economics Nobel Prize. John
Maynard Smith was awarded the Crafoord Prize for his application of game theory to
biology.
Next Up
2.
1.
Hedonic Regression
Automated Valuation Model - AVM
3.
Multi-Factor Model
4.
Model Risk
5.
The most common example of the hedonic pricing method is in the housing
market: the price of a property is determined by the characteristics of the
house (size, appearance, features, condition) as well as the characteristics of
the surrounding neighborhood (accessibility to schools and shopping, level of
water and air pollution, value of other homes, etc.) The hedonic pricing model
is used to estimate the extent to which each factor affects the price.
water. Diamonds, however, are scarce. Because they are harder to find and attain, our
marginal utility (additional satisfaction), for adding a diamond to our collection is much
higher than someone offering us one more drink of water. If one is dying of thirst, then this
paradox might not make sense, and the marginal utility from another drink of water would
be much higher than the additional satisfaction of owning a diamond. Let's look at a few
examples.
Examples
Does paying $300-$400 dollars for an Xbox compared to $50 for a solid pair of shoes make
sense? From a practical and survival standpoint, it certainly doesn't. In order to get around
and enable our most basic form of transportation (walking), we need shoes to protect our
feet. They are certainly more important and practical than an Xbox. The price difference
comes back to the satisfaction, or marginal utility, we get from purchasing a pair of shoes
compared to an Xbox. If you were in the middle of the jungle and trying to survive, you
might pay more for those shoes, but until that happens, most of us will continue to pay
more for our electronics!
Van Gogh, Picasso, and Monet paintings have sold for well over $50 million dollars! You can
pick up a frying pan you can use every day to cook your food for less than $20 dollars.
Marginal utility and scarcity can explain this crazy difference in value again, with a special
emphasis on the scarcity of the products. There are millions of frying pans for sale. There
may only be a few dozen original paintings from famous artists. The satisfaction someone
gets from knowing he or she owns a rare piece of art is much higher than the satisfaction
from owning another frying pan; therefore the person is willing to pay a much higher