Social, Behavioral and Experimental Economics Seminar: Matthew Kovach

Intertial Updating

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Abstract
We introduce and characterize inertial updating of beliefs. Under inertial updating, a decision maker (DM) chooses a belief that minimizes the subjective distance between their prior belief and the set of beliefs consistent with the observed event. Importantly, by varying the subjective notion of distance, inertial updating provides a unifying framework that nests three different types of belief updating:

Bayesian updating, non-Bayesian updating rules such as the α−β rule (Grether, 1980), and updating rules for events with zero probability, like the conditional probability system (CPS) of Myerson (1986a,b). We demonstrate that our model is behaviorally equivalent to the Hypothesis Testing model (HT) of Ortoleva (2012), clarifying the connection between HT and CPS. We apply our model to a persuasion game.

Speaker bio

Matthew Kovach, collegiate assistant professor of economics in the College of Science at Virginia Tech, has been awarded the H.H.H. Faculty Fellowship in Economics by the Virginia Tech Board of Visitors.

The H.H.H. Faculty Fellowship in Economics was established in the Department of Economics through a gift from Hans H. Haller, who began his career at Virginia Tech in 1986. Haller established the Fellowship to provide support to an outstanding faculty member, with a preference for junior or early-career faculty.

Recipients hold the title of H.H.H. Faculty Fellow in Economics for a period of two years.

A member of the Virginia Tech faculty since 2017, Kovach is an economic theorist working on behavioral models of decision theory with focus not necessarily on building rational models of individual decision-making, but realistic models of human decision-making. This work is at the frontier of economic theory that can explain the rich variety of actual human behavior. His research has practical implications for many important problems facing society.

Kovach has four peer-reviewed publications in the top disciplinary journals with an additional five completed working papers. This past year, he presented his research at nine different national and international conferences and is well-known in the decision theory community both nationally and internationally. He plays an integral role in the development of the new Behavioral Decision Science program, teaching and developing three courses, and in the Data and Decisions Destination Area.

Kovach earned a bachelor’s degree in business economics from the University of California Santa Barbara in 2010, and master’s and doctoral degrees from California Institute of Technology, both in social science in, respectively, 2012 and 2015. Prior to arriving at Virginia Tech, Kovach was a visiting assistant professor at the Instituto Tecnológico Autónomo de México.