05 August 2011

Prosperity defined?

Prosperity defined? (Maybe)

I recently read a paper called Information, Utility & Bounded Rationality, by Pedro A. Ortega and Daniel A. Braun.

They define what they call "free utility", akin to free energy in thermodynamics. They propose that free utility can be used as a variational principle as in control theory, leading to bounded optimal control solutions and recovering some well-known decision theory results.

So they found a connection between decision theory and thermodynamics. And it looks to be a deep one.

Another thing I liked

Decision theory tends to start by neglecting the cost of making decisions. It adds it on later, as Value Of Perfect Information (VOPI) and bounded rationality. It tends to feel bolted on, heterogeneous.

Free utility OTOH feels like a homogeneous concept. If I had to give that concept a familiar name, it would be "prosperity".

Abstract of the paper

Perfectly rational decision-makers maximize expected utility, but crucially ignore the resource costs incurred when determining optimal actions. Here we employ an axiomatic framework for bounded rational decision-making based on a thermodynamic interpretation of resource costs as information costs. This leads to a variational "free utility" principle akin to thermodynamical free energy that trades off utility and information costs. We show that bounded optimal control solutions can be derived from this variational principle, which leads in general to stochastic policies. Furthermore, we show that risk-sensitive and robust (minimax) control schemes fall out naturally from this framework if the environment is considered as a bounded rational and perfectly rational opponent, respectively. When resource costs are ignored, the maximum expected utility principle is recovered.

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