Frontiers of finance: Evolution and efficient markets

In this review article, we explore several recent advances in the quantitative modeling of financial markets. We begin with the Efficient Markets Hypothesis and describe how this controversial idea has stimulated a number of new directions of research, some focusing on more elaborate mathematical models that are capable of rationalizing the empirical facts, others taking a completely different tack in rejecting rationality altogether. One of the most promising directions is to view financial markets from a biological perspective and, specifically, within an evolutionary framework in which markets, instruments, institutions, and investors interact and evolve dynamically according to the “law” of economic selection. Under this view, financial agents compete and adapt, but they do not necessarily do so in an optimal fashion. Evolutionary and ecological models of financial markets is truly a new frontier whose exploration has just begun.

A mouse CD8 T cell-mediated acute autoimmune diabetes independent of the perforin and Fas cytotoxic pathways: Possible role of membrane TNF

Double transgenic mice [rat insulin promoter (RIP)-tumor necrosis factor (TNF) and RIP-CD80] whose pancreatic β cells release TNF and bear CD80 all develop an acute early (6 wk) and lethal diabetes mediated by CD8 T cells. The first ultrastructural changes observed in β cells, so far unreported, are focal lesions of endoplasmic reticulum swelling at the points of contact with islet-infiltrating lymphoblasts, followed by cytoplasmic, but not nuclear, apoptosis. Such double transgenic mice were made defective in either the perforin, Fas, or TNF pathways. Remarkably, diabetes was found to be totally independent of perforin and Fas. Mice lacking TNF receptor (TNFR) II had no or late diabetes, but only a minority had severe insulitis. Mice lacking the TNF-lymphotoxin (LTα) locus (whose sole source of TNF are the β cells) all had insulitis comparable to that of nondefective mice, but no diabetes or a retarded and milder form, with lesions suggesting different mechanisms of injury. Because both TNFR II and TNF-LTα mutations have complex effects on the immune system, these data do not formally incriminate membrane TNF as the major T cell mediator of this acute autoimmune diabetes; nevertheless, in the absence of involvement of the perforin or Fas cytotoxic pathways, membrane TNF appears to be the likeliest candidate.