In this Element the authors review the technique of the change of numeraire in the martingale approach to option pricing. Their intention is to present a reader friendly explanation of the technique itself, and illustrate how it is applied in various fields of quantitative finance as the basis for building option valuation models.  Meer

Successful investment strategies are specific implementations of general theories. An investment strategy that lacks a theoretical justification is likely to be false.  Meer

The goal of this Element is to provide a detailed introduction to adaptive inventories, an approach to making surveys adjust to respondents' answers dynamically.  Meer

We elaborate a general workflow of weighting-based survey inference, decomposing it into two main tasks. The first is the estimation of population targets from one or more sources of auxiliary information.  Meer

In discrete choice models the relationships between the independent variables and the choice probabilities are nonlinear, depending on both the value of the particular independent variable being interpreted and the values of the other independent variables.  Meer

Social interactions are rich, complex, and dynamic. One way to understand these is to model interactions that fascinate us. Some of the more realistic and powerful models are computer simulations.  Meer

Virtually all journal articles in the factor investing literature make associational claims, in denial of the causal content of factor models. Authors do not identify the causal graph consistent with the observed phenomenon, they justify their chosen model specification in terms of correlations, and they do not propose experiments for falsifying causal mechanisms.  Meer

Quantitative social scientists use survival analysis to understand the forces that determine the duration of events. This Element provides a guideline to new techniques and models in survival analysis, particularly in three areas: non-proportional covariate effects, competing risks, and multi-state models.  Meer

This Element is intended for students and practitioners as a gentle and intuitive introduction to the field of discrete-time yield curve modelling. I strive to be as comprehensive as possible, while still adhering to the overall premise of putting a strong focus on practical applications.  Meer

In this Element and its accompanying second Element, A Practical Introduction to Regression Discontinuity Designs: Extensions, Matias Cattaneo, Nicolás  Idrobo, and Rocıìo Titiunik provide an accessible and practical guide for the analysis and interpretation of regression discontinuity (RD) designs that encourages the use of a common set of practices and facilitates the accumulation of RD-based empirical evidence.  Meer

The rise of the internet and mobile telecommunications has created the possibility of using large datasets to understand behavior at unprecedented levels of temporal and geographic resolution.  Meer

The main goal of this Element is to provide a psychological explanation for why actual global climate policy is so greatly at odds with the prescriptions of most neoclassical economists.  Meer

The main goal of this Element is to provide a psychological explanation for why actual global climate policy is so greatly at odds with the prescriptions of most neoclassical economists.  Meer

To supplement replacement income provided by Social Security and employer­sponsored pension plans, individuals need to rely on their own saving and investment choices during accumulation.  Meer

Text contains a wealth of information about about a wide variety of sociocultural constructs. Automated prediction methods can infer these quantities (sentiment analysis is probably the most well-known application).  Meer

In the age of data-driven problem-solving, applying sophisticated computational tools for explaining substantive phenomena is a valuable skill. Yet, application of methods assumes an understanding of the data, structure, and patterns that influence the broader research program.  Meer

This Element discusses how shiny, an R package, can help instructors teach quantitative methods more effectively by way of interactive web apps. The interactivity increases instructors' effectiveness by making students more active participants in the learning process, allowing them to engage with otherwise complex material in an accessible, dynamic way.  Meer

Text is everywhere, and it is a fantastic resource for social scientists. However, because it is so abundant, and because language is so variable, it is often difficult to extract the information we want.  Meer

Building on the Cambridge Element Agent Based Models of Social Life: Fundamentals (Cambridge, 2020), we move on to the next level. We do this by building agent based models of polarization and ethnocentrism.  Meer

Images play a crucial role in shaping and reflecting political life. Digitization has vastly increased the presence of such images in daily life, creating valuable new research opportunities for social scientists.  Meer