Public and private learning from prices, strategic substitutability and complementarity, and equilibrium multiplicity

We study a general static noisy rational expectations model where investors have private information about asset payoffs, with common and private components, and about their own exposure to an aggregate risk factor, and derive conditions for existence and uniqueness (or multiplicity) of equilibria. We find that a main driver of the characterization of equilibria is whether the actions of investors are strategic substitutes or complements. This latter property in turn is driven by the strength of a private learning channel from prices, arising from the multidimensional sources of asymmetric information, in relation to the usual public learning channel. When the private learning channel is strong (weak) in relation to the public we have strong (weak) strategic complementarity in actions and potentially multiple (unique) equilibria. The results enable a precise characterization of whether information acquisition decisions are strategic substitutes or complements. We find that the strategic substitutability in information acquisition result obtained in Grossman and Stiglitz (1980) is robust. JEL Classification: D82, D83, G14 Keywords: Rational expectations equilibrium, asymmetric information, risk exposure, hedging, supply information, information acquisition.

Growth, selection and appropriate contracts

We study a dynamic model where growth requires both long-term investment and the selection of talented managers. When ability is not ex-ante observable and contracts are incomplete, managerial selection imposes a cost, as managers facing the risk of being replaced tend to choose a sub-optimally low level of long-term investment. This generates a trade-off between selection and investment that has implications for the choice of contractual relationships. Our analysis shows that rigid long-term contracts sacrificing managerial selection may be optimal at early stages of economic development and when access to information is limited. As the economy grows, however, knowledge accumulation increases the return to talent and makes it optimal to adopt flexible contractual relationships, where managerial selection is implemented even at the cost of lower investment. Better institutions, in the form of a richer contracting environment and less severe informational frictions, speed up the transition to short-term relationships.

Hardy-Weinberg Equilibrium and the Ternary Plot

The Hardy-Weinberg law, formulated about 100 years ago, states that under certainassumptions, the three genotypes AA, AB and BB at a bi-allelic locus are expected to occur inthe proportions p2, 2pq, and q2 respectively, where p is the allele frequency of A, and q = 1-p.There are many statistical tests being used to check whether empirical marker data obeys theHardy-Weinberg principle. Among these are the classical xi-square test (with or withoutcontinuity correction), the likelihood ratio test, Fisher's Exact test, and exact tests in combinationwith Monte Carlo and Markov Chain algorithms. Tests for Hardy-Weinberg equilibrium (HWE)are numerical in nature, requiring the computation of a test statistic and a p-value.There is however, ample space for the use of graphics in HWE tests, in particular for the ternaryplot. Nowadays, many genetical studies are using genetical markers known as SingleNucleotide Polymorphisms (SNPs). SNP data comes in the form of counts, but from the countsone typically computes genotype frequencies and allele frequencies. These frequencies satisfythe unit-sum constraint, and their analysis therefore falls within the realm of compositional dataanalysis (Aitchison, 1986). SNPs are usually bi-allelic, which implies that the genotypefrequencies can be adequately represented in a ternary plot. Compositions that are in exactHWE describe a parabola in the ternary plot. Compositions for which HWE cannot be rejected ina statistical test are typically “close" to the parabola, whereas compositions that differsignificantly from HWE are “far". By rewriting the statistics used to test for HWE in terms ofheterozygote frequencies, acceptance regions for HWE can be obtained that can be depicted inthe ternary plot. This way, compositions can be tested for HWE purely on the basis of theirposition in the ternary plot (Graffelman & Morales, 2008). This leads to nice graphicalrepresentations where large numbers of SNPs can be tested for HWE in a single graph. Severalexamples of graphical tests for HWE (implemented in R software), will be shown, using SNPdata from different human populations

Enhanced Model Selection for motion segmentation

In this paper a novel rank estimation technique for trajectories motion segmentation within the Local Subspace Affinity (LSA) framework is presented. This technique, called Enhanced Model Selection (EMS), is based on the relationship between the estimated rank of the trajectory matrix and the affinity matrix built by LSA. The results on synthetic and real data show that without any a priori knowledge, EMS automatically provides an accurate and robust rank estimation, improving the accuracy of the final motion segmentation

Electoral competition through issue selection

Politics must tackle multiple issues at once. In a first-best world, political competition constrains parties to prioritize issues according to the voters' true concerns. In the real world, the opposite also happens: parties manipulate voter priorities by emphasizing issues selectively during the political campaign. This phenomenon, known as priming, should allow parties to pay less attention to the issues that they intend to mute. We develop a model of endogenous issue ownership in which two vote-seeking parties (i) invest to attract voters with "better" policy proposals and (ii) choose a communication campaign to focus voter attention on specific issues. We identify novel feedbacks between communication and investment. In particular, we find that stronger priming effects can backfire by constraining parties to invest more resources in all issues, including the ones they would otherwise intend to mute. We also identify under which conditions parties prefer to focus on their "historical issues" or to engage in issue stealing. Typically, the latter happens when priming effects are strong, and historical reputations differentiates parties less.

The Impact of advice on women's and men's selection into competition

We conduct a laboratory experiment to study how advice affects the gender gap in the entry into a real-effort tournament. Our experiment is motivated by the concerns raised by approaching the gender gap through affirmative action. Advice is given by subjects who have already had some experience with the participation decision. We show that advice improves the entry decision of subjects, in that forgone earnings due to wrong entry decisions go significantly down. This is mainly driven by significantly increased entry of strong performing women, who also become significantly more confident, and reduced entry of weak performing men.

Sales restriction, quality selection and the mode of competition

A regulator imposing “sales restrictions” on firms competing in oligopolistic markets may enhance quality provision by the firms. Moreover, for most restrictions levels, the impact on quality selection is invariant to the mode of competition

Bayesian nash equilibrium in ''linear'' cournot models with private information about costs

Calculating explicit closed form solutions of Cournot models where firms have private information about their costs is, in general, very cumbersome. Most authors consider therefore linear demands and constant marginal costs. However, within this framework, the nonnegativity constraint on prices (and quantities) has been ignored or not properly dealt with and the correct calculation of all Bayesian Nash equilibria is more complicated than expected. Moreover, multiple symmetric and interior Bayesianf equilibria may exist for an open set of parameters. The reason for this is that linear demand is not really linear, since there is a kink at zero price: the general ''linear'' inverse demand function is P (Q) = max{a - bQ, 0} rather than P (Q) = a - bQ.

Portafolio selection with skewness: a comparison of methods and a generalized two fund separation result

This contribution compares existing and newly developed techniques for geometrically representing mean-variances-kewness portfolio frontiers based on the rather widely adapted methodology of polynomial goal programming (PGP) on the one hand and the more recent approach based on the shortage function on the other hand. Moreover, we explain the working of these different methodologies in detail and provide graphical illustrations. Inspired by these illustrations, we prove a generalization of the well-known two fund separation theorem from traditionalmean-variance portfolio theory.

Social capital and the equilibrium number of entrepreneurs

Social capital is viewed either as a proprietary asset that serves private interests, including those of entrepreneurs, or as a collective asset that supports trust-based transactions saving on transaction costs both in markets and within the boundaries of firms, and benefiting society as a whole. This paper explains the relative specialization between entrepreneurs and market-governed exchanges as a result of the interaction between social capital that lowers transaction costs, and the scale economies of ability in managerial jobs (Lucas 1978). The main hypothesis formulated in the paper is that higher social capital will benefit the hierarchy relatively more than the market as a governance mechanism, and therefore in economies with higher social capital, the equilibrium number of entrepreneurs will be lower and their average span of control larger than in economies with lower social capital. The empirical evidence, with data from the Spanish Autonomous Communities, is consistent with this prediction.

Equilibrium of drops on inclined hydrophilic surfaces

Why does not gravity make drops slip down the inclined surfaces, e.g., plant leaves? The current explanation is based on the existence of surface inhomogeneities, which cause a sustaining force that pins the contact line. Following this theory, the drop remains in equilibrium until a critical value of the sustaining force is reached. We propose an alternative analysis, from the point of view of energy balance, for the particular case in which the drop leaves a liquid film behind. The critical angle of the inclined surface at which the drop slips down is predicted. This result does not depend explicitly on surface inhomogeneities, but only on the drop size and surface tensions. There is good agreement with experiments for contact angles below 90° where the formation of the film is expected, whereas for greater contact angles great discrepancies arise

A genetic algorithm to ensemble feature selection

We are going to implement the "GA-SEFS" by Tsymbal and analyse experimentally its performance depending on the classifier algorithms used in the fitness function (NB, MNge, SMO). We are also going to study the effect of adding to the fitness function a measure to control complexity of the base classifiers.

Inter-rater agreement and reliability of the COSMIN (COnsensus-based Standards for the selection of health status Measurement Instruments) Checklist

Background: The COSMIN checklist is a tool for evaluating the methodological quality of studies on measurement properties of health-related patient-reported outcomes. The aim of this study is to determine the inter-rater agreement and reliability of each item score of the COSMIN checklist (n = 114). Methods: 75 articles evaluating measurement properties were randomly selected from the bibliographic database compiled by the Patient-Reported Outcome Measurement Group, Oxford, UK. Raters were asked to assess the methodological quality of three articles, using the COSMIN checklist. In a one-way design, percentage agreement and intraclass kappa coefficients or quadratic-weighted kappa coefficients were calculated for each item. Results: 88 raters participated. Of the 75 selected articles, 26 articles were rated by four to six participants, and 49 by two or three participants. Overall, percentage agreement was appropriate (68% was above 80% agreement), and the kappa coefficients for the COSMIN items were low (61% was below 0.40, 6% was above 0.75). Reasons for low inter-rater agreement were need for subjective judgement, and accustom to different standards, terminology and definitions.Conclusions: Results indicated that raters often choose the same response option, but that it is difficult on item level to distinguish between articles. When using the COSMIN checklist in a systematic review, we recommend getting some training and experience, completing it by two independent raters, and reaching consensus on one final rating. Instructions for using the checklist are improved.

Distribution of events of positive selection and population differentiation in a metabolic pathway: the case of asparagine N-glycosylation

Background: Asparagine N-Glycosylation is one of the most important forms of protein post-translational modification in eukaryotes. This metabolic pathway can be subdivided into two parts: an upstream sub-pathway required for achieving proper folding for most of the proteins synthesized in the secretory pathway, and a downstream sub-pathway required to give variability to trans-membrane proteins, and involved in adaptation to the environment andinnate immunity. Here we analyze the nucleotide variability of the genes of this pathway in human populations, identifying which genes show greater population differentiation and which genes show signatures of recent positive selection. We also compare how these signals are distributed between the upstream and the downstream parts of the pathway, with the aim of exploring how forces of population differentiation and positive selection vary among genes involved in the same metabolic pathway but subject to different functional constraints. Results:Our results show that genes in the downstream part of the pathway are more likely to show a signature of population differentiation, while events of positive selection are equally distributed among the two parts of the pathway. Moreover, events of positive selection arefrequent on genes that are known to be at bifurcation points, and that are identified as beingin key position by a network-level analysis such as MGAT3 and GCS1.Conclusions: These findings indicate that the upstream part of the Asparagine N-Glycosylation pathway has lower diversity among populations, while the downstream part is freer to tolerate diversity among populations. Moreover, the distribution of signatures of population differentiation and positive selection can change between parts of a pathway, especially between parts that are exposed to different functional constraints. Our results support the hypothesis that genes involved in constitutive processes can be expected to show lower population differentiation, while genes involved in traits related to the environment should show higher variability. Taken together, this work broadens our knowledge on how events of population differentiation and of positive selection are distributed among different parts of a metabolic pathway.

Signatures of selection in the human olfactory receptor OR5I1 gene

The human olfactory receptor repertoire is reduced in comparison to other mammalsand to other non-human primates. Nonetheless, this olfactory decline opens an opportunity forevolutionary innovation and improvement. In the present study, we focus on an olfactoryreceptor gene, OR5I1, which had previously been shown to present an excess of amino acidreplacement substitutions between humans and chimpanzees. We analyze the geneticvariation in OR5I1 in a large worldwide human panel and find an excess of derived allelessegregating at relatively high frequencies in all populations. Additional evidence for selectionincludes departures from neutrality in allele frequency spectra tests but no unusually extendedhaplotype structure. Moreover, molecular structural inference suggests that one of thenonsynonymous polymorphisms defining the presumably adaptive protein form of OR5I1may alter the functional binding properties of the olfactory receptor. These results arecompatible with positive selection having modeled the pattern of variation found in the OR5I1gene and with a relatively ancient, mild selective sweep predating the “Out of Africa”expansion of modern humans.