arXiv subjects

Enrique ter Horst

Publications and source records attributed to Enrique ter Horst.

8 recordsLinked to original sources

arXiv2026

Teleodynamic Learning a new Paradigm For Interpretable AI

We introduce Teleodynamic Learning, a new paradigm for machine learning in which learning is not the minimization of a fixed objective, but the emergence and stabilization of functional organization under constraint. Inspired by living systems, this framework treats intelligence as the coupled evolution of three quantities: what a system can represent, how it adapts its parameters, and which changes its internal resources can sustain. We formalize learning as a constrained dynamical process with two interacting timescales: inner dynamics for continuous parameter adaptation and outer dynamics for discrete structural change, linked by an endogenous resource variable that both shapes and is shaped by the trajectory. This perspective reveals three phenomena that standard optimization does not naturally capture: self-stabilization without externally imposed stopping rules, phase-structured learning dynamics that move from under-structuring through teleodynamic growth to over-structuring, and convergence guarantees grounded in information geometry rather than convexity. We instantiate the framework in the Distinction Engine (DE11), a teleodynamic learner grounded in Spencer-Brown's Laws of Form, information geometry, and tropical optimization. On standard benchmarks, DE11 achieves 93.3 percent test accuracy on IRIS, 92.6 percent on WINE, and 94.7 percent on Breast Cancer, while producing interpretable logical rules that arise endogenously from the learning dynamics rather than being imposed by hand. More broadly, Teleodynamic Learning unifies regularization, architecture search, and resource-bounded inference within a single principle: learning as the co-evolution of structure, parameters, and resources under constraint. This opens a thermodynamically grounded route to adaptive, interpretable, and self-organizing AI.

cs.LG↗

arXiv2026

Categorical Belief Propagation: Sheaf-Theoretic Inference via Descent and Holonomy

We develop a categorical foundation for belief propagation on factor graphs. We construct the free hypergraph category \(\Syn_Σ\) on a typed signature and prove its universal property, yielding compositional semantics via a unique functor to the matrix category \(\cat{Mat}_R\). Message-passing is formulated using a Grothendieck fibration \(\int\Msg \to \cat{FG}_Σ\) over polarized factor graphs, with schedule-indexed endomorphisms defining BP updates. We characterize exact inference as effective descent: local beliefs form a descent datum when compatibility conditions hold on overlaps. This framework unifies tree exactness, junction tree algorithms, and loopy BP failures under sheaf-theoretic obstructions. We introduce HATCC (Holonomy-Aware Tree Compilation), an algorithm that detects descent obstructions via holonomy computation on the factor nerve, compiles non-trivial holonomy into mode variables, and reduces to tree BP on an augmented graph. Complexity is \(O(n^2 d_{\max} + c \cdot k_{\max} \cdot δ_{\max}^3 + n \cdot δ_{\max}^2)\) for \(n\) factors and \(c\) fundamental cycles. Experimental results demonstrate exact inference with significant speedup over junction trees on grid MRFs and random graphs, along with UNSAT detection on satisfiability instances.

cs.AI↗

arXiv2014

A Bayesian Beta Markov Random Field Calibration of the Term Structure of Implied Risk Neutral Densities

We build on the work in Fackler and King 1990, and propose a more general calibration model for implied risk neutral densities. Our model allows for the joint calibration of a set of densities at different maturities and dates through a Bayesian dynamic Beta Markov Random Field. Our approach allows for possible time dependence between densities with the same maturity, and for dependence across maturities at the same point in time. This approach to the problem encompasses model flexibility, parameter parsimony and, more importantly, information pooling across densities.

stat.AP↗

arXiv2009

Stochastic Volatility Models Including Open, Close, High and Low Prices

Mounting empirical evidence suggests that the observed extreme prices within a trading period can provide valuable information about the volatility of the process within that period. In this paper we define a class of stochastic volatility models that uses opening and closing prices along with the minimum and maximum prices within a trading period to infer the dynamics underlying the volatility process of asset prices and compares it with similar models that have been previously presented in the literature. The paper also discusses sequential Monte Carlo algorithms to fit this class of models and illustrates its features using both a simulation study and data form the SP500 index.

q-fin.ST↗

arXiv2008

Measuring expectations in options markets: An application to the SP500 index

Extracting market expectations has always been an important issue when making national policies and investment decisions in financial markets. In option markets, the most popular way has been to extract implied volatilities to assess the future variability of the underlying with the use of the Black and Scholes formula. In this manuscript, we propose a novel way to extract the whole time varying distribution of the market implied asset price from option prices. We use a Bayesian nonparametric method that makes use of the Sethuraman representation for Dirichlet processes to take into account the evolution of distributions in time. As an illustration, we present the analysis of options on the SP500 index.

q-fin.PR↗

arXiv2007

Filtering Additive Measurement Noise with Maximum Entropy in the Mean

The purpose of this note is to show how the method of maximum entropy in the mean (MEM) may be used to improve parametric estimation when the measurements are corrupted by large level of noise. The method is developed in the context on a concrete example: that of estimation of the parameter in an exponential distribution. We compare the performance of our method with the bayesian and maximum likelihood approaches.

cs.LG↗

arXiv2007

Assessment and Propagation of Input Uncertainty in Tree-based Option Pricing Models

This paper aims to provide a practical example on the assessment and propagation of input uncertainty for option pricing when using tree-based methods. Input uncertainty is propagated into output uncertainty, reflecting that option prices are as unknown as the inputs they are based on. Option pricing formulas are tools whose validity is conditional not only on how close the model represents reality, but also on the quality of the inputs they use, and those inputs are usually not observable. We provide three alternative frameworks to calibrate option pricing tree models, propagating parameter uncertainty into the resulting option prices. We finally compare our methods with classical calibration-based results assuming that there is no options market established. These methods can be applied to pricing of instruments for which there is not an options market, as well as a methodological tool to account for parameter and model uncertainty in theoretical option pricing.

cs.CE↗

arXiv2006

Towards a Bayesian framework for option pricing

In this paper, we describe a general method for constructing the posterior distribution of an option price. Our framework takes as inputs the prior distributions of the parameters of the stochastic process followed by the underlying, as well as the likelihood function implied by the observed price history for the underlying. Our work extends that of Karolyi (1993) and Darsinos and Satchell (2001), but with the crucial difference that the likelihood function we use for inference is that which is directly implied by the underlying, rather than imposed in an ad hoc manner via the introduction of a function representing "measurement error." As such, an important problem still relevant for our method is that of model risk, and we address this issue by describing how to perform a Bayesian averaging of parameter inferences based on the different models considered using our framework.

cs.CE↗