Lecture times & locations (provisional):
Tuesday 14:00-15:00 MS.01
Friday 12:00-13:00 ARTS-CINEMA
Friday 16:00-17:00 MS.01
Warwick tradition is to start 5 min past the hour and end 5 min before the hour, to give everybody the chance to get to different rooms between lectures. I'll try to do by best to keep to the end time, with a little bit of wiggle room sometimes.
Lecturer: Dr Julia Brettschneider
Introduction (first lecture(s)): Motivation & examples.
Part I (weeks 1-5): Normative decision theory: Concepts of (conditional) probability and interpretations (classical, axiomatic, geometric, frequentist, subjective), coherence, Dutch books, elicitation of subjective probabilities, expectation and prediction, normative theory of optimal decisions making under uncertainty: loss function, EMV, minimax, decision trees, utility, preferences, paradoxes (Allais, Ellsberg), limitations of these approaches.
Part II (weeks 6-7): Normative game theory: Rationality and common knowledge assumption, separability, dominance, Newcomb's paradox, mixed, optimal and worthwhile strategies, value of a game, zero-sum games, equilibrium, incomplete information.
Part III (weeks 8-10): Descriptive decision theory and modifications of normative models: Paradoxes, ambiguity, Kahneman & Tversky's school of heuristics and biases/fallacies, risk attitudes, risk perception, probability distortion functions, prospect theory, risk communication, mathematical/statistical modelling.
There will be 5 exercise sheets posted here over the course of term 1. Solutions will be posted by beginning of term 3 to support your revision process.
Assessment and informal quizzes
The final module mark is based on 100% exam.
- April Exam: more information about logistics is at the university's exam page with a specific data being announced (quite late in my experience) on this subpage.
- Mock exam paper and mock exam paper solution.
- Warwick past exam paper collection (includes previous years' ST222 exam papers).
- The week 6 class test conducted in previous years has been discontinued for logistic resaons and because it had the side effect of given more weight to the first half of the module. Instead, we will have a three informal quizzes to give students an opportunity to monitor their learning in a more comprehensive way. They will be at the end of Part I, Part II and Part III. They will be posted here in Week 6, Week 8 and Week 11.
Revision and practicing for the exam
- Exercise sheets are an excellent way to revise the material and to prepare for the exam.
- The three informal quizzes posted over the course of term 1 are useful to test initial understanding while the material is still quite new to you. This can help you staying on top of the material during term. However, they are more superficial than exam questions.
- Mock exam paper and mock exam paper solution.
- Warwick past exam paper collection (includes previous years' ST222 exams).
Lecture notes and resources
Part I and II is largely based on lecture notes of its predecessor module (ST114), which will also be posted chapter by chapter in the relevant week below. The notes have been developped by lecturers who previously taught that module including Jim Smith, Wilfrid Kendall, Jim Griffith, Julia Brettschneider, Jane Hutton, Adam Johansen and Ben Graham.
Some of the examples and theory presented at the blackboard/white board go beyond these notes. Please take your own notes. If you can not make it to class, please ask a fellow student to share this with you.
For Part III slides and some additional reading material and links to resources will be posted in the relevant week below. For students who like to print slides beforehand, I will try to post preliminary versions of the slides the evening before class.
Weekly summaries (to be posted on this website - scroll down)
For each week, I provide the following material on this website:
- short summaries of the lectures
- links to resources
- a bit of study advice
- answered questions by/to students
Material relating to week n will be posted by Monday of week n+1 at the latest. If I am sometimes delayed to due illness or travelling, please be patient.
Content, aims and objectives
For the formal description of this module, go back to the main module page. In a nutshell, we want to understand decision making and games. The latter can be understood as two people taking decisions in turn. We will contrast optimal decisions (normative theory) with how real people make decisions in real life (descriptive theory). The latter takes into account the presense of uncertainty, emotions, ambiguity, incomplete information etc. Applications are manifold including questions about engineering, individual medical treatments, vaccination programs, insurance, financial investments, business strategies, urban planning, education policies and more.
History and motivation
This module is the answer to the request of the SSLC to re-introduce ST114. It has now become a second year module with an extended syllabus including more applications and descriptive theory. The latter has become increasingly relevant for a modern understanding of decision making behaviour in complex and real world situations for humans, that is, for homo sapiens as opposed to homo economicus (or robots, for that matter).
Relationships to other running modules
- There is a small overlap with Mathematical Economics 1A. However, the latter focusses on games only, whereas ST222 includes only 2 weeks of game theory and devotes the remaining 8 week to subjective probability and decision theory. Another differenct is the emphasis. ST222 develops two contrasting alternatives theories of decision making: the normative and the descriptive approach. We introduce students to the philosophy and elicitation of subjective probabilities, to psychological perception of randomness and to behaviour under risk and uncertainty, which includes learning about studies conducted with people (including Warwick students). Finally, ST222 uses applications from a wide range of domains including medicine, sciences, engineering, finance, operational research and everyday life.
- This modules also give a first taste of advanced Bayesian decision theory taught in the module ST301.
ST111 or ST115 is required, because we are using an axiomatic approach to probability. In fact, ST222 provides a good opportunities to develop more intuition for the interpretation and application of probabilities, especially conditional ones.
While we are hoping that you will benefit from taking this module both academically and personally, the Department of Statistics is not responsible for all decisions you take applying the methods you learned. For example, if you determine that it is not worth to revise before the exam, you can not appeal on grounds of expected utility theory. And if you select the wrong girlfriend/boyfriend, we do not have the capacities to find you a better one. (But we do encourage studying in teams and engaging in group grocery shopping to maximise the number of options in the first place.)
Weekly Summaries - to come during term time week by week
Friday noon (L2).
Friday 4pm (L3).