The importance of categorical reasoning in human cognition is well-established in psychology and cognitive science, and it is generally acknowledged that one of the most important functions of categorization is to facilitate prediction. This paper provides a model of optimal categorization. In...

We study environments in which agents are randomly matched to play a Prisoner's Dilemma, and each player observes a few of the partner's past actions against previous opponents. We depart from the existing related literature by allowing a small fraction of the population to be commitment types....

We experimentally explore the role of collective incentives in sustaining cooperation in finitely repeated public goods games with imperfect monitoring. In our experiment players only observe noisy signals about individual contributions, while total output is perfectly observed. We consider...

Regression trees are evaluated with respect to mean square error (MSE), mean integrated square error (MISE), and integrated squared error (ISE), as the size of the training sample goes to infinity. The asymptotically MSE- and MISE minimizing (locally adaptive) regression trees are characterized....

We develop a formal theory of decency. Shared values and understandings give rise to social norms. Norms may mandate collectively optimal behavior, but they need not do so. Furthermore, behavior can be affected by social values even if it stops short of norm compliance. Seeking stronger...

We study learning in a decentralized pairwise adverse selection economy, where buyers have access to the quality of traded goods but not to the quality of non- traded goods. Buyers categorize ask prices in order to predict quality as a function of ask price. The categorization is endogenously...

We develop a formal model of social duties. Duties to respect entitlements (duties of justice) differ from duties to promote well-being (duties of charity). A situationspecific version of our model takes entitlements as primitives. A fully portable version derives entitlements from situational...

The importance of categorical reasoning in human cognition is well-established in psychology and cognitive science, and it is generally acknowledged that one of the most important functions of categorization is to facilitate prediction. This paper provides a model of optimal categorization. In...