Re: fuzzy finance


Subject: Re: fuzzy finance
From: Paul Victor Birke (nonlinear@home.com)
Date: Sat Mar 04 2000 - 15:13:26 MET


Pramit Sarma wrote:
>
> All,
>
> I too have been watching this parley with some interest. Besides
> interest in things AI, real-world stuff (process engineering) definitely
> indicates the "steal with pride" thing. The way engineers put it, is
> that which works well (demonstrably) shall be put to work!
>
> It is, intuitively, clear that all this Theory of Possibility vs.
> Probability is more like one multi-wrench vs. another. The possible
> (probable?) problem being here, that here the two can and do have some
> similar "heads". Systems common sense, rather than wrangling, seems to
> indicate both tools are not only useful, the similarities need to
> highlighted, leading to a clearer way of looking at the critical and
> *useful* differences. Synergy as the key, and all that. That, and the
> pretty clear systems axiom: "There is no Universal Model"!
>
> It is possible that everyone in the discussion is not also involved in
> fuzzy logic control (FLC), or rather in control systems. So, despite
> being a strong proponent of FLC, nevertheless there are many quasi-crisp
> controller models which have been working for decades, very well. One of
> this set is the Optimal/Stochastic Controllers and Estimators (LQG,
> Kalman, etc.)**. They are all variously based on probabilistic Gaussian
> noise models. So indeed there are, and several, probabilistic control
> applications. The fact that some of the most successful FLC fuzzy terms
> tend to be Gaussian (an observation of my own FLC work, too) ... appears
> to me as one of those synergies.
>
> ** (For an interesting debate on crisp/optimal control vs. fuzzy
> control, with Athans vs. Zadeh, have a look at the IEEE Control Systems
> Mag., June 1999)
>
> Finally, I think that in systems the phrase "The end justifies the
> means" is particularly attractive and devoid of most of its negative
> connotations, for (intelligent) systems engineers ... and to the most
> important person at the end of the loop: the end-user.
>
> Pramit
>>snippings<<

Dear Pramit

Well you have hit it on the head so to say. I think the engineering
viewpoint, at least mine, is to use those things for each that could
bear on the current problem at hand. It is something like the debate
over statistical methods vs ANN especially between Kernel Methods and
those of RBFNNs. My message there was that RBFNN or ANN had other
peoples with a >>different set of eyes<<. So you have new energy and
some new twists and turns. I think anything or trick or insight that
helps adds to total understanding and can lead a given engineer to have
a >>richer attack<< on a given problem.

When I had looked a Fuzzy Pricing some years back most of the people
around and atop me did not know what I way talking about. Let alone any
debate re Probability Theory which they seem to have forgotten or never
adsorbed in the first place.

So it does not surprise me that discussions continue re defining
differences between Fuzzy and Probability.
However, like you say it is better to integrate the concepts and use
them in one's personal approach and repertoire.

Paul

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