An emergent theme of my on-going PhD research is to develop a causal understanding of terrorist organisational decision-making and ways to counteract it. (This will be possible future research under the heading of causal counterterrorism.) This has led me to read current philosophy on causal agency.
Florida State University professor Alfred R. Mele has a new book on my ‘reading pile’ to consider: Aspects of Agency: Decisions, Abilities, Explanations, and Free Will (New York: Oxford University Press, 2017). Mele’s discussion of proximal and distal causes is relevant to my analysis of cultural transmission, social learning, and folklore as possible mechanisms. A summary of Mele’s new book:
The libertarian theory of free will combines a negative thesis and a positive thesis. The negative thesis is that free will is incompatible with determinism. The positive thesis is that there are actions that involve exercises of free will—‘free actions,’ for short. While remaining neutral on this negative thesis, Aspects of Agency develops a detailed version of the positive thesis that represents paradigmatically free actions as indeterministically caused by their proximal causes and pays special attention to decisions so instigated. The bulk of Mele’s work is a masterful defense of a positive libertarian thesis against objections to theses of its kind. Aspects of Agency includes solutions to problems about luck and control that are widely discussed in the literature on free will and moral responsibility. The seven chapters on free will are preceded by an introductory chapter and three chapters on central issues in the philosophy of action that bear on standard treatments of free will: deciding to act, agents’ abilities, and commitments of a causal theory of action explanation.
Sarah E. Knight, Carys Keane and Amy Murphy (of the UK-based Defense Science and Technology Laboratory and Her Majesty’s Prison and Probation Service) have a new article out in Terrorism and Political Violence:
Anticipating whether an adversary group will continue to use their usual (“conventional”), expected attack methods is important for military and counterterrorism practitioners tasked with protecting the security of others. Conventional attack methods are by their nature easier to plan and prepare for whilst “innovative” methods may take those responsible for security and counterterrorism by surprise and, as such, may have more impact and more serious consequences. The present study aimed to develop understanding of how, when, and why adversary groups might decide to use conventional attack methods or opt to do something innovative instead. A literature review was conducted and findings were applied to develop a thorough understanding of the decision-making process that underlies an adversary group’s choice of attack method. Identified are three stages preceding the execution of an attack: a) “strategic direction”; b) “incubation”; and c) “planning and preparation,” plus “overarching” and “contextual” factors that can influence the process at each stage. It is suggested that it is these factors and how they influence decision-making that result in innovative methods being used to execute an attack, or convention prevailing. Findings can aid practitioners and policy-makers in counterterrorism, security, and law enforcement, to support their understanding, evaluation, and countering of current and future threats.
US capital and derivatives markets in mid-2008 provide a real-time laboratory for behavioural finance analysts who want to understand the madness and wisdom of crowds. The past week’s case studies include the implosion of the US bank IndyMac and the market volatility triggered by fears that Fannie Mae & Freddie Mac are highly exposed to liquidity risk.
As financial reporter Michael S. Rosenwald notes in The New York Times, these recent events appear to fit the behavioural finance hypothesis that individual investors who make fear-driven and risk-averse decisions can trigger pricing shifts as an aggregate rational herd. Guillermo A. Calvo and Enrique Mendoza found in a 1997 paper that globalisation counteracts the emergence of rumour markets based on imperfect information and country-specific knowledge, although not in emerging markets due to uncertainties.
However the recent events have different conditions that set delimits on Calvo and Mendoza’s model: the United States is the epicentre of the bear market triggered by the 2007 subprime crisis, Fannie Mae and Freddie Mac have psychological primacy as major financial institutions with US Federal Government backing, and investment media firms such as Bloomberg and CNBC use globalisation to create de facto rumour markets amongst day-traders and others.
Readers interested in rational herds should also check out Christopher P. Chamley’s book Rational Herds: Economic Models of Social Learning (Cambridge University Press, Cambridge UK, 2004), excerpt here.
Decision researchers are the other early winners of the 2007 subprime crisis, due to the failure of many quantitative models to predict the Black Swan event. Rosenwald mentions Harvard University’s new Bio-Behavioral Laboratory for Decision Science which conducts ‘conducts research on the mechanisms through which emotional and social factors influence judgment and decision making.’ He also refers to the Oregon-based nonprofit group Decision Research. An Australian-based counterpart might be the Capital Markets CRC, an R&D consortia that focuses on ‘new technologies and improvements in market design’.
Investment analysts still have divergent opinions on recent events. However the research agenda above prompts several new questions: What happens to rational herds and rumour markets when bio-behavioural methods of decision-making are no longer ‘imperfect information’ but are widely understood and integrated into investment choices? How will markets be redesigned to cope with this eventuality, and who will take on this responsibility? What new financial instruments, markets and products will emerge generativity?