Talk:Applied information economics

From Wikipedia, the free encyclopedia
Jump to: navigation, search

My conflict of interest[edit]

I fully disclosed my conflict of interest in writing this page. Following the COI guidelines, I'm not making any further changes to the page. The article link off of my name should be removed by someone, however. There is no article named "Douglas Hubbard"Hubbardaie 19:17, 30 June 2007 (UTC)

Reference Needed?[edit]

Rinconsoleao wrote "(REFERENCE NEEDED)" (not the wikipedia fact tag) after the sentence about Calbrated Probability Assessments. Simply going to that article would provide all the references needed. However, since I have COI and have bowed out of any further changes to thea article, someone else will have to do that. ThankyouHubbardaie 03:49, 17 July 2007 (UTC)

references from other articles[edit]

I'm going to limit my references to AIE from other articles. There seems to be some consternation about COI and relevance in each case. I'm happy to discuss any of the references to AIE. Perhaps we can consolidate those discussions under one banner - perhaps this article. Hubbardaie 03:49, 17 July 2007 (UTC)

Limitations Discussion[edit]

To balance a NPOV of the article, we need "cons" as well as "pros". I was asked to propose some limitations in order to avoid possible further confusion with other areas of economics. If anything in the article causes confusion with other topics, I'll also attempt to address that. As I've disclosed with my COI, I'm avoiding making major changes directly to the article myself. I'll simply make suggestions here and hope others pick it up to guarantee NPOV.

First, I do allude to some limitations in the article and I see that there were a couple of edits in the past to make the language more "neutral" (even though I thought I was going for neutrality). Here are a few:

  1. It is more complicated than other methods currently used for most major, risky decisions in business. It is less complicated than many optimization methods used many areas of operations research, management science, etc. but management is used to using far, far simpler methods. Management that is used to using, at best, a traditional accounting-style cost-benefit analysis, will probably find this to be more complicated.
  2. There are still only no more than a few dozen experts fully trained in this method (although many less-trained individuals are probably using it to various degrees). This number is increasing all the time, but it limits wide adoption by business.
  3. It has some of the same limitations of traditional cost-benefit analysis in that it does not guarantee that some important factor wont be excluded if nobody thinks of adding it. It simply ensures that the factors that were included are at least calibrated estimates (not overconfident or underconfident) and that further reduction of uncertainty (by measurement efforts) is optimized and applied to the right factors.
  4. It allows for some of the same limitations as Monte Carlo simulations. For example, if some variables are (unknown to the analysts) covariant, then the Monte Carlo would generate a distribution of results that does not fit reality.
  5. Calibration removes certain types of systemic biasis in human estimates, but not all of them. It is a significant improvement on Monte Carlos models that have no calibration for initial estimates, but there is no guarantee that other biasis of experts will not be introduced into the model.
  6. It is a only a very narrow and modified application of MPT. Since many business investments are evaluated as opportunities arise, and not in a large "batch", they are often evaluated as an investment one at a time. The only persitently used component of MPT is the investment boundary, modified for the assessment of single investments of various sizes.
OK, I took those into account in the article. Still something does not seem clear. The book title says "finding a value...". I tend to consider that finding a value is a valuation, therefore a potential price estimate. And such "pricing" seems to me essential to make investment decisions, if only to compare the various opportunities. Is there something related to that in your model? --Pgreenfinch 15:11, 17 July 2007 (UTC)
I see your point. I discuss "value" both in a monetary valuation sense and the broader sense that "value" means simply "quantity". This was a matter of some discussion when selecting the book title because I was fairly sure it might be confused with various books on property valuation methods. The publisher felt that it was more important simply to have words like "value" in the title of a professional trade book like this. Unless someone comes from the more specialized property valuation field, it shouldn't be confusing. The book does address in detail how to compute monetary values for "intangibles" like customer satisfaction, strategic risk reduction, product quality, etc. but only for the purpose of determining if certain investments in these areas are justified. I think most managers would think of "price" as refering to a revenue from a the transaction for the sale of something sold on the market. I never hear them use the word "price" for things like the business value of some new big IT project. They might think of "price" as more of a synonym for "cost" in this context - meaning the price they pay for it - but even then I think that is rare. This is probably more confusing for someone who has studied certain specific areas of economics or property valuation than the average manager (who is my targeted reader). Again, AIE is a normative, prescriptive decision model for managers. It optimizes the selection of alternatives especially when inputs to the decision are highly uncertain and even ill-defined. The reason for the name "Applied Information Economics" however, is that it emphasizes modeling the current state of uncertainty with calibrated estimates and then computing the value of additional information on each uncertain variable before proceeding.Hubbardaie 15:33, 17 July 2007 (UTC)
By the way, the grammar in the first sentence in limitations does not seem to add up. Can you check that and make sure it says what you want it to say? Also, I hope as some point we can reach a NPOV here and remove the NPOV tag. Thanks. Hubbardaie 15:37, 17 July 2007 (UTC)

Claim of Wikipedia Abuse?[edit]

The following individual is apparently concerned about the references to AIE from other articles. I responded to his claims below. As I said above, I would be happy to discuss any of the references but a more constructive tone would be appreciated. Thanks for your input! Hubbardaie 03:49, 17 July 2007 (UTC)

there is a serious abuse of Wikipedia going on here!

Apparently Hubbard's method of "Applied Information Economics" is in fact used in some real-world contexts, and therefore might be worthy of a Wikipedia page. But the abuse by D. Hubbard and his associates is much worse than the fact that this particular article was used for self-promotion. He/they have been inserting references to "Applied Information Economics" again and again at the very beginning of pages where it is completely inappropriate. He/they inserted comments on AIE at the beginning of the Monte Carlo method page (a huge topic in mathematics, engineering, statistics, etc. where the possible contributions of AIE have nothing to do with most applications) and the Information economics page (central to recent Nobel-prize winning economics, and applied in many ways unrelated to Hubbard and his book). Many pages on financial analysis, investment management, and related topics had comments inserted right at the beginning claiming that AIE was "more rigorous" than standard methods, or "statistically and economically sound" in contrast to other methods. In other words, Hubbard and the others who make related edits (who are probably either his employees or his sock puppets) are trying to mislead Wikipedia users into believing that AIE is a prominent method widely accepted as being better than the alternatives. I'm not sure if that is criminal financial fraud, but it is definitely an abuse of Wikipedia's trust. I would suggest deleting this page, and it would also be helpful if someone could write a bot to delete references to Applied Information Economics. --Rinconsoleao 23:34, 16 July 2007 (UTC)

Your accusations are wholly out of line. "Criminal financial fraud"? Really. Before and after the article passed a deletion vote with flying colors, I added references to AIE where I thought it was appropriate.
I may have overreacted to a series of edits which to me are clearly abuses of Wikipedia's norms. But if anyone working with your message posts anonymously here, they really may want to consider the possibility that anonymously promoting your method as if it were a widely-accepted industry norm could be illegal. See the following blog entry (July 16, 2007) at the New York Times:[1] --Rinconsoleao 07:47, 17 July 2007 (UTC)
I've made these changes using the user name HubbardAIE and I've stated in wikipedia several times that I'm Doug Hubbard, creator of AIE. How much less "anonymous" can I be?Hubbardaie 10:48, 17 July 2007 (UTC)
After checking on some users who have contributed to this page or pages that link here, it appears to me that most either give their names or post under identifiable names. Still, if any of them have financial interests in companies promoting the AIE methodology, their posts are in danger of violating Wikipedias's conflict of interest norms. --Rinconsoleao 10:34, 17 July 2007 (UTC)
I've trained a lot of people in AIE but nobody else has a financial interest other than me in my own firm. Some of the people I've trained have also done AIE consulting on their own, but I don't keep track of them all. In one case, a client of mine made changes under the username BillGossett. But, again, that was also disclosed and he has no ownership of any AIE firm or tools. On the other hand, if you are saying that people who have consulted for hire in a particular area of expertise are at a COI in that area for wikipedia, I think you would be excluding a lot of knowledgeable authors.Hubbardaie 10:55, 17 July 2007 (UTC)

The references provided are evidence of the extensiveness of the use of AIE and and it was sufficient for those who participated in the deletion discussion. Read all the references and the deletion discussion. When I have added a reference to AIE and others thought it was not relevant they would delete or move it and I have rarely changed it back. If you think a reference to AIE is not relevant in a particular article then you are free to make changes or at least discuss them. Contrary to your claim, I've used my HubbardAIE name to explicitly to make my identity clear. Wikipedia is for rational debates and constructive collaboration, not just false allegations.Hubbardaie 02:44, 17 July 2007 (UTC)

On further investigation, I see I made no recent changes to the article page of Information Economics. I did once add a single reference to the AIE page but that was deleted quite a while back and since then I've contributed only to the talk page.
The reference was still there (right at the end of the first paragraph, as if it were a crucial final point) on July 16, when I deleted it: [2]. --Rinconsoleao 07:45, 17 July 2007 (UTC)
I believe I only made one insertion toward the bottom in references. But if you are disputing where the reference should be I have no problem with that. As I explained in the extensive discussion on that article, the topic is quite muddled and should be disambiguated. Where the article refers to the Nobel Prize winning economies of asymetric information, I totally agree that it has little in commmon with AIE (or, at least, AIE would only be mentioned if it were a much longer article on the topic). My reference to AIE was in regards to two other uses of the term. Like the economics of asymetric information, AIE also uses the same formulas for computing the expected value of information as discussed, in part, in articles like expected value of perfect information. But beyond that, the topics of asymetric information and AIE diverge. Still the article clearly makes referce to information economics also in that simple decision theory sense. Also, AIE was created in part in response to a popular weighted scoring method for IT called "information economics" (Parker, Bensen, Trainor). This is probably what the article refers to about using information economics for IT and has nothing to do with asymetric information markets. If the article were disambiguated I would insert references to AIE in the expected value of information parts and the weighted scoring for IT part. Otherwise I concede your point.Hubbardaie 11:04, 17 July 2007 (UTC)

I also see that you apparently have a motive regarding another page where you discuss Analytic Hierarchy Process. Thomas Saaty and his wife were attempting to delete any reference to mathematical proofs that showed potential flaws in the method. Are you sure you are not one of them or a seller of an AHP tool?

Actually I had never heard of Analytic Hierarchy Process until I started searching for gratuitous insertions of Applied Information Economics in pages where it is tangential. --Rinconsoleao 07:47, 17 July 2007 (UTC)
Then I retract that claim. My bad.Hubbardaie 10:50, 17 July 2007 (UTC)

If you are reacting for that, note I don't think AHP is a bad tool. But like most such tools, it does have limitations and flaws. That does not make it useless. But admitting to the flaws at least makes the conversation more open.Hubbardaie 02:55, 17 July 2007 (UTC)

Talking about limitations and flaws, this article badly needed a section about them. I initialized it but it should be completed. I think in particular that it is in the interest of the main author that a full picture of the assumptions on which his work is based on, and of the reliability and completeness of those assumptions, be given. --Pgreenfinch 07:32, 17 July 2007 (UTC)
I have no problem with someone inserting pros and cons but your insertion shows a complete misunderstanding of not only AIE but several concepts of economics. AIE has nothing to do with EMH and it explicitly includes items what you call "soft" valuation criteria. It even addresses some "emotional effects" (although I don't know exactly to what you refer) in the calibratiion methods. The use of the word "victim" is also presumptive. I'm not going to say AIE has no "cons" to its "pros" but, if you check the references more carefully, you will see that none of these particular "flaws" apply. Your last sentence in the article summed up the key problem with your comments. You said it innacurately predicts prices. AIE is not about "predicting prices". You are apparently under the false impression that AIE is price prediction tool. I think you are confusing AIE with the economies of asymetric information concept currently listed under the "information economics" article. Hubbardaie 11:12, 17 July 2007 (UTC)
I replied in my discussion page. Now the confusion is total as you talk about a normative method and another user talk about microeconomics with Ackerlof lemons added. Now the point is that this article needs a section on limitations to be encyclopedic and it seems that, except rebutting what I proposed, nobody seems too eager about going on with it. Well, maybe in order to be "charitable" as you stated below ;-)) --Pgreenfinch 13:33, 17 July 2007 (UTC)
I was apparently replying to your user talk page at the same time. I agree with this point you are making now. See the limitations discussion section above.Hubbardaie 13:45, 17 July 2007 (UTC)
Actually, this last rebuttal of Pgreenfinch is based on a misunderstanding. Information economics, understood as a subfield of microeconomics, including the work on asymmetric information by Akerlof, Spence, and Stiglitz, has almost nothing to do with price prediction. It instead focuses on the role of information in economic markets: how information can be traded, how information affects the trade of other goods, and what sorts of contracts improve efficiency in markets where information plays a role. Therefore I will remove (or edit as necessary) your comment about asymmetric information theories having something to do with price prediction. --Rinconsoleao 11:56, 17 July 2007 (UTC)
Actually, I was trying to be charitable to Pgreenfinch since that is the only way his changes make any sense (confusing AIE with Information Economics). EMH and price prediction, if anything, have EVEN less to do with AIE. As you said, AIE is a decision making tool and he is talking about predicting prices and "assumptions" based on EMH. I understand that a balanced discussion of a topic like this needs some reference to limitations, but these "limitations" are limitations of an entirely different topic.Hubbardaie 12:08, 17 July 2007 (UTC)


The following comments were addressed by the addition of sufficient citations and references that proved the subject is not a neologism and has been the subject of substantial government studies (see citations and external links)Hubbardaie 03:17, 16 June 2007 (UTC)

Advertisement for book by D. Hubbard, "How to Measure Anything: Finding the Value of Intangibles in Business", John Wily & Sons, 2007. Also neologism. User Hubbardaie [3] in internal spamming this article. --SueHay 00:13, 8 June 2007 (UTC)
I'll add it back without the reference to the book. —The preceding unsigned comment was added by Hubbardaie (talkcontribs) 20:15, 7 June 2007.
It's still a neologism obviously added to promote the book. And Hubbard. --SueHay 00:22, 8 June 2007 (UTC)
See my other recently added comments which I believe refute the claim you just made (AIE is public domain - below). Usually, a 10-12 year old term used in other publications by those other than the person who coined it, used as the title of a class in a university, and in the public domain (not trademarked) would not be a neologism.Hubbardaie
Also, note that AIE is an alternative to Balanced Scorecard. Both are public domain methods although they were largely initiated by a single book or set of authors. Neither term is a trademark nor has either method been patented. In both cases, multiple firms exist that provide services in that area. One difference I see is that there are apparently no courses actually named "balanced scorecard" in the ciriculum of major universities. I agree that the AIE article should be just as neutral as the balanced scorecard article. If the AIE article must be deleted, then the Balanced Scorecard articles (and many others, no doubt) would have to be deleted if the same rules applied.Hubbardaie 01:29, 8 June 2007 (UTC)

AIE is public domain[edit]

Apparently the only reason this is seen as a "blantant advertisement" is the citation of my book. I'm fine with the removal of that. However, you will find that Applied Information Economics is taught in more than one university and used in several government agencies if you google the phrase. The term is not trademarked and the process is public domain. If you think it makes it "less blatant" then feel free to remove reference to Douglas W. Hubbard. But why not apply the same rules to the Balanced Scorecard article? Or the Analytic Hierarchy Process article? Hubbardaie 00:36, 8 June 2007 (UTC)

Stanford class on unrelated topic[edit]

Previously, the AIE page included the following claim:

College classes on AIE are taught at Wharton and other schools.[1]

The class in question is not actually at Wharton; it is in the Management Science and Engineering department at Stanford, taught by a Wharton alumnus named Thomas A. Weber (and for some reason, when queried on Google, the title of the page is identified as "Wharton").

More importantly, the class has nothing to to with the AIE method of Douglas Hubbard. It is a class in Information economics, in its usual meaning as a subfield of microeconomics, which is not the same thing as AIE. The syllabus recommends a long list of texts which are standard references in that field. It does not make any mention of any publication by Douglas Hubbard or by his firm. The class is called "Applied" because (quoting the syllabus)

"The research paper should address an applied problem. For instance, the paper could address an informational aspect of your broader research agenda, or it could produce a neat insight based on a model of a specific strategic interaction between two or more economic agents..."

--Rinconsoleao 21:40, 17 July 2007 (UTC)

logic project?[edit]

While I'm sure AIE above all else must at least be logical, why would this be in the logic project? That would only make sense if every subdiscipline of economics, statistics, management science, mathematics and decision theory were part of the logic project. In fact, I would say all of the empirical sciences should be part of a logic project in that sense. Is this tag being added to that many articles?Hubbardaie 14:26, 31 July 2007 (UTC)

Agreed. --Rinconsoleao 15:05, 31 July 2007 (UTC)
Now that I've looked at the page for the SatyrBot Project, I see they really ARE putting tags on that many articles. I think this confuses the topic of logic a bit. Although attempts have been made to derive all of math from axioms of logic (See Bertrand Russel et. al. "Principia Mathmatica"), logic is usually treated as a subset of mathematics. For example, you might see mathematical logic taught as one class in the math or philosophy department, not math taught as one class in the logic department. It appears this bot is tagging everything that is even remotely quantitative - most of it having to do with decisions but also even beyond that. I'm afraid this poorly-defined project scope would lead to some very muddled articles.Hubbardaie 22:06, 31 July 2007 (UTC) (I don't know how this comment got someone else's user name attached to it, but I changed it)Hubbardaie 22:06, 31 July 2007 (UTC)
I'm deleting it. Let's see if they come back. --Rinconsoleao 23:50, 31 July 2007 (UTC)

COI tag[edit]

This article has been up for a while with plenty of opportunity for additional comments. At least two others have made modifications to the content and citations of the article including a "limitations" section. I have not made any changes to the article for quite a while. The remainder is an article that relies on other independent referenced sources for most of it and now only the "limitations" section is still mostly unsourced.

I will still refrain from making changes to the article but is it time to say that the article is not a COI? How much more "balanced" does an article need to get before its no longer considered COI?

Just a question.Hubbardaie 22:20, 28 August 2007 (UTC)

Further use of existing citations[edit]

If anyone were so inclined, the two documents that came from the Federal CIO study on AIE (the first two cited sources) contains other commonents - including pro's and con's - on AIE and especially its comparison to balanced scorecard. Again, I can't make those changes directly without COI issues popping up.Hubbardaie 22:24, 28 August 2007 (UTC)

Further changes[edit]

I have a couple more clarifications but, as I've stated before, I've limited my own edits due to COI (as the inventor of the method). The second bullet of the "Comparison to other methods" section asks for citation. The citation should be the link as that bullet shows to calibrated probability assessment. The citation for the third bullet can be my book (also referenced) since I did a study that demonstrated that point and explained it in the book.Hubbardaie (talk) 23:29, 16 February 2008 (UTC)

Sticking to the Facts[edit]

Regarding the 7 March 2013 edit: "Currently, AIE does not appear to be considered a "standard" risk management tool. No evidence in any of the cite books appears to validate this method of risk management as relates to validity or reliability"

Note that, as author of these books and developer of AIE, I have an explicitly and openly revealed COI. But I could not let this edit stand unchallenged. I undid the edit but I believe this action was merited entirely by Wikipedia standards independent of who undoes the edit. It stated that AIE "does not appear to be a standard risk management" method. Of course, it is fair to say this method newer than many of the more popular (but much less scientific) risk management methods used outside of proper quantitative risk analysis methods (actuarial science, operations research, quantitative finance, etc.). But there are multiple problems with this statement as it stood. "Does not appear" is not a statement in line with an encyclopedic article. Furthermore, it either violated the original research prohibition in Wikipedia or, if not, should provide a specific citation. The author of the last edit might be able to say that AIE is used less than other methods according to some published survey he/she can locate. And risk management is only part of AIE, anyway. It addresses the broader issue of quantitative decision analysis, of which risk management and risk analysis is only a subset.

The last edit also claimed that no citations regarding the effectiveness of AIE were stated in the books. This is simply incorrect. As stated in the previous paragraph, AIE is built on components that have significant research behind them and they have been cited. The key components are calibration training, information value calculations, and Monte Carlo simulations. Each of these is based on theoretically well-established methods or significant and published empirical evidence of efficacy, or both. The books also list several published works showing problems with both expert intuition and soft ordinal scales. All that the author of the previous edit might be able to say is that there have been no published, longitudinal studies on the use of AIE as a whole (not just its individual components). But that is also true of all of the most popular non-quantitative methods and this limitation was already stated in the previous paragraph. It is possible that, however unlikely, even though each component of AIE is actually based on published research, the combined effect is somehow unrealized. It would be possible to make a factual claim similar to that without making the errors of the previous edit.

It should also be pointed out that AIE is not entirely different from other methods that have proposed combining calibrated estimates, information value calculations, Bayesian methods, and Monte Carlos. Ron Howard and Max Henrion proposed similar methods - both specifically mention calibrated estimates used in Monte Carlos and the use of information . I suppose the editor was excluding operations research, quantitative financial methods, and actuarial science from "standard risk management". In those fields, some application of Monte Carlo is quite common. I have also noticed that calibration training and overconfidence are part of the new behavioral economics/finance tests in actuarial exams.

In summary, AIE is relatively new but it is based entirely on well-proven components and it replaces methods like ordinal scales which have no evidence of improving decisions at all either at the component level or at the level of the aggregated components in the method. A key point of all of my books is that you should be skeptical of any method (including AIE) but don't forget to be equally skeptical of the presumed alternatives (your expert judgment, ordinal scales). When the weight of the evidence is considered, the components of AIE have much more credibility than the components of many popular methods.Hubbardaie Doug Hubbard