Interpreting Quantifier Scope Ambiguity: Evidence of Heuristic First, Algorithmic Second Processing

The present work suggests that sentence processing requires both heuristic and algorithmic processing streams, where the heuristic processing strategy precedes the algorithmic phase. This conclusion is based on three self-paced reading experiments in which the processing of two-sentence discourses was investigated, where context sentences exhibited quantifier scope ambiguity. Experiment 1 demonstrates that such sentences are processed in a shallow manner. Experiment 2 uses the same stimuli as Experiment 1 but adds questions to ensure deeper processing. Results indicate that reading times are consistent with a lexical-pragmatic interpretation of number associated with context sentences, but responses to questions are consistent with the algorithmic computation of quantifier scope. Experiment 3 shows the same pattern of results as Experiment 2, despite using stimuli with different lexicalpragmatic biases. These effects suggest that language processing can be superficial, and that deeper processing, which is sensitive to structure, only occurs if required. Implications for recent studies of quantifier scope ambiguity are discussed.

Volume-Synchronized Probability of Informed Trading (VPIN), Market Volatility, and High-Frequency Liquidity

We assess the predictive ability of three VPIN metrics on the basis of two highly volatile market events of China, and examine the association between VPIN and toxic-induced volatility through conditional probability analysis and multiple regression. We examine the dynamic relationship on VPIN and high-frequency liquidity using Vector Auto-Regression models, Granger Causality tests, and impulse response analysis. Our results suggest that Bulk Volume VPIN has the best risk-warning effect among major VPIN metrics. VPIN has a positive association with market volatility induced by toxic information flow. Most importantly, we document a positive feedback effect between VPIN and high-frequency liquidity, where a negative liquidity shock boosts up VPIN, which, in turn, leads to further liquidity drain. Our study provides empirical evidence that reflects an intrinsic game between informed traders and market makers when facing toxic information in the high-frequency trading world.