Polarization, fractionalization and conflict

A recent upsurge of empirical studies on the causes of conflict attempts to connect various features of the distribution of the relevant characteristic (typically ethnicity or religion) to conflict. The distributional indices differ (polarization, fractionalization or Lorenz-domination) and so do the various specifications of "conflict" (onset, incidence or intensity). Overall, the results are far from clear, and combined with the mixture of alternative indices and notions of "conflict" it is not surprising that the reader may come away thoroughly perplexed. The aim of this paper is to provide a theoretical framework that permits us to distinguish between the occurrence of conflict and its severity and that clarifies the role of polarization and fractionalization in each of these cases.

Addressing the net balances problem as a prerequisite for EU budget reform: a proposal

Conflict among member states regarding the distribution of net financial burdens has been allowed to contaminate the entire design of the EU budget with very negative consequences in terms of equity, efficiency and transparency. To get around this problem and pave the way for a substantive budget reform, we propose to decouple distributional negotiations from the rest of the budget process by linking member state net balances in a rigid manner to relative prosperity. This would be achieved through the introduction of a system of compensating horizontal transfers that would take to its logical conclusion the Commission's proposal for a generalized compensation mechanism. We discuss the impact of the proposed scheme on member states? incentives and illustrate its financial implications using revenue and expenditure projections for 2013 that are based on the current Financial Perspectives and Own Resources Decision.

On locally finite transitive two-ended digraphs

Projecte de recerca elaborat a partir d’una estada al Department de Matemàtica Aplicada de la Montanuniversität Leoben, Àustria, entre agost i desembre del 2006. L’ objectiu ha estat fer recerca sobre digrafs infinits amb dos finals, connexos i localment finits, i, en particular, en digrafs amb dos finals i altament arc-transitius. Malnic, Marusic et al. van introduir un nou tipus de relació d’equivalència en els vèrtexs d’un dígraf, anomenades relacions d’assolibilitat, que generalitzen i tenen el seu origen en un problema posat per Cameron et al., on les classes de la relació d’equivalència eren vèrtexs que pertanyien a un camí alternat del dígraf . Malnic et al. en el mencionat article van establir connexions ben estretes entre aquestes relacions d’assolibilitat i l'estructura de finals i creixement dels digrafs localment finits i transitius. En aquest treball, s’ha caracteritzat per complet aquestes relacions d’assolibitat en el cas de dígrafs localment finits i transitius amb exactament dos finals, en termes de la descomposició en números primers del número de línies que genera el digraf amb dos finals. A més, es nega la Conjectura 1 sostinguda per Seifter que afirmava que un digraf connex localment finit amb més d’un final era necessàriament o be 0-, 1- o altament arc-transitiu. Seifer havia donat una solució parcial a la conjectura pel cas de digrafs regulars amb grau primer que tinguin un conjunt de tall connex. En aquest treball, es descriu una família infinita de dígrafs regulars de grau dos, amb dos finals, exactament 2-arc transitius i no 3-arc transitius. Així, es nega la Conjectura de Seifter en el cas general, fins i tot per grau primer. Tot i així, la solució parcial donada per Seifter en el seu article és en cert sentit la millor possible i l'existència un conjunt de tall connex essencial.

Characterizations of Lojasiewicz inequalities and applications

The classical Lojasiewicz inequality and its extensions for partial differential equation problems (Simon) and to o-minimal structures (Kurdyka) have a considerable impact on the analysis of gradient-like methods and related problems: minimization methods, complexity theory, asymptotic analysis of dissipative partial differential equations, tame geometry. This paper provides alternative characterizations of this type of inequalities for nonsmooth lower semicontinuous functions defined on a metric or a real Hilbert space. In a metric context, we show that a generalized form of the Lojasiewicz inequality (hereby called the Kurdyka- Lojasiewicz inequality) relates to metric regularity and to the Lipschitz continuity of the sublevel mapping, yielding applications to discrete methods (strong convergence of the proximal algorithm). In a Hilbert setting we further establish that asymptotic properties of the semiflow generated by -∂f are strongly linked to this inequality. This is done by introducing the notion of a piecewise subgradient curve: such curves have uniformly bounded lengths if and only if the Kurdyka- Lojasiewicz inequality is satisfied. Further characterizations in terms of talweg lines -a concept linked to the location of the less steepest points at the level sets of f- and integrability conditions are given. In the convex case these results are significantly reinforced, allowing in particular to establish the asymptotic equivalence of discrete gradient methods and continuous gradient curves. On the other hand, a counterexample of a convex C2 function in R2 is constructed to illustrate the fact that, contrary to our intuition, and unless a specific growth condition is satisfied, convex functions may fail to fulfill the Kurdyka- Lojasiewicz inequality.

Three essays on the psychology of investment and financial markets

Préface My thesis consists of three essays where I consider equilibrium asset prices and investment strategies when the market is likely to experience crashes and possibly sharp windfalls. Although each part is written as an independent and self contained article, the papers share a common behavioral approach in representing investors preferences regarding to extremal returns. Investors utility is defined over their relative performance rather than over their final wealth position, a method first proposed by Markowitz (1952b) and by Kahneman and Tversky (1979), that I extend to incorporate preferences over extremal outcomes. With the failure of the traditional expected utility models in reproducing the observed stylized features of financial markets, the Prospect theory of Kahneman and Tversky (1979) offered the first significant alternative to the expected utility paradigm by considering that people focus on gains and losses rather than on final positions. Under this setting, Barberis, Huang, and Santos (2000) and McQueen and Vorkink (2004) were able to build a representative agent optimization model which solution reproduced some of the observed risk premium and excess volatility. The research in behavioral finance is relatively new and its potential still to explore. The three essays composing my thesis propose to use and extend this setting to study investors behavior and investment strategies in a market where crashes and sharp windfalls are likely to occur. In the first paper, the preferences of a representative agent, relative to time varying positive and negative extremal thresholds are modelled and estimated. A new utility function that conciliates between expected utility maximization and tail-related performance measures is proposed. The model estimation shows that the representative agent preferences reveals a significant level of crash aversion and lottery-pursuit. Assuming a single risky asset economy the proposed specification is able to reproduce some of the distributional features exhibited by financial return series. The second part proposes and illustrates a preference-based asset allocation model taking into account investors crash aversion. Using the skewed t distribution, optimal allocations are characterized as a resulting tradeoff between the distribution four moments. The specification highlights the preference for odd moments and the aversion for even moments. Qualitatively, optimal portfolios are analyzed in terms of firm characteristics and in a setting that reflects real-time asset allocation, a systematic over-performance is obtained compared to the aggregate stock market. Finally, in my third article, dynamic option-based investment strategies are derived and illustrated for investors presenting downside loss aversion. The problem is solved in closed form when the stock market exhibits stochastic volatility and jumps. The specification of downside loss averse utility functions allows corresponding terminal wealth profiles to be expressed as options on the stochastic discount factor contingent on the loss aversion level. Therefore dynamic strategies reduce to the replicating portfolio using exchange traded and well selected options, and the risky stock.

Formal deformations of Poisson structures in low dimensions

In this paper, we study formal deformations of Poisson structures, especially for three families of Poisson varieties in dimensions two and three. For these families of Poisson structures, using an explicit basis of the second Poisson cohomology space, we solve the deformation equations at each step and obtain a large family of formal deformations for each Poisson structure which we consider. With the help of an explicit formula, we show that this family contains, modulo equivalence, all possible formal eformations. We show moreover that, when the Poisson structure is generic, all members of the family are non-equivalent.

Individual versus group strategy-proofness: when do they coincide?

A social choice function is group strategy-proof on a domain if no group of agents can manipulate its final outcome to their own benefit by declaring false preferences on that domain. Group strategy-proofness is a very attractive requirement of incentive compatibility. But in many cases it is hard or impossible to find nontrivial social choice functions satisfying even the weakest condition of individual strategy-proofness. However, there are a number of economically significant domains where interesting rules satisfying individual strategy-proofness can be defined, and for some of them, all these rules turn out to also satisfy the stronger requirement of group strategy-proofness. This is the case, for example, when preferences are single-peaked or single-dipped. In other cases, this equivalence does not hold. We provide sufficient conditions defining domains of preferences guaranteeing that individual and group strategy-proofness are equivalent for all rules defined on the

A Thomason model structure on the category of small n-fold categories

We construct a cofibrantly generated Thomason model structure on the category of small n-fold categories and prove that it is Quillen equivalent to the standard model structure on the category of simplicial sets. An n-fold functor is a weak equivalence if and only if the diagonal of its n-fold nerve is a weak equivalence of simplicial sets. We introduce an n-fold Grothendieck construction for multisimplicial sets, and prove that it is a homotopy inverse to the n-fold nerve. As a consequence, the unit and counit of the adjunction between simplicial sets and n-fold categories are natural weak equivalences.

Time-consistent fiscal policy under heterogeneity: Conflicting or common interests?

This paper studies the aggregate and distributional implications of Markov-perfect tax-spending policy in a neoclassical growth model with capitalists and workers. Focusing on the long run, our main fi ndings are: (i) it is optimal for a benevolent government, which cares equally about its citizens, to tax capital heavily and to subsidise labour; (ii) a Pareto improving means to reduce ine¢ ciently high capital taxation under discretion is for the government to place greater weight on the welfare of capitalists; (iii) capitalists and workers preferences, regarding the optimal amount of "capitalist bias", are not aligned implying a conflict of interests.

Understanding the vertical equity judgements underpinning health inequality measures

The choice of income-related health inequality measures in comparative studies is often determined by custom and analytical concerns, without much explicit consideration of the vertical equity judgements underlying alternative measures. This note employs an inequality map to illustrate how it these judgements that affect the ranking of populations by health inequality. In particular, it is shown that relative indices of inequality in health attainments and shortfalls embody distinct vertical equity judgments, where each may represent ethically defensible positions in specific contexts. Further research is needed to explore people’s preferences over distributions of income and health.

Median Independent Inequality Orderings

To date, inequality orderings for ordered response data are only suitable for comparing distributions that share a common median state. In this paper we propose a methodology for comparing distributions irrespective of their medians. We set out to do so by introducing a general pre-ordering and equivalence relation defined over distributions with different median responses, leading us naturally to derive a partial ordering over equivalence classes. We then discuss the implications of our results for the axiomatic derivation of inequality indices for ordered response data.

Aggregate and welfare effects of long run inflation risk under inflation and price-level targeting

This paper presents a DSGE model in which long run inflation risk matters for social welfare. Aggregate and welfare effects of long run inflation risk are assessed under two monetary regimes: inflation targeting (IT) and price-level targeting (PT). These effects differ because IT implies base-level drift in the price level, while PT makes the price level stationary around a target price path. Under IT, the welfare cost of long run inflation risk is equal to 0.35 percent of aggregate consumption. Under PT, where long run inflation risk is largely eliminated, it is lowered to only 0.01 per cent. There are welfare gains from PT because it raises average consumption for the young and lowers consumption risk substantially for the old. These results are strongly robust to changes in the PT target horizon and fairly robust to imperfect credibility, fiscal policy, and model calibration. While the distributional effects of an unexpected transition to PT are sizeable, they are short-lived and not welfare-reducing.

Effects of Experience, Knowledge and Signals on Willingness to Pay for a Public Good

This paper compares how increases in experience versus increases in knowledge about a public good affect willingness to pay (WTP) for its provision. This is challenging because while consumers are often certain about their previous experiences with a good, they may be uncertain about the accuracy of their knowledge. We therefore design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. Using data for two different public goods, we show qualitative equivalence of the effect of knowledge and experience on valuation for a public good. Surprisingly, though, we find that the causal effect of objective signals about the accuracy of a subject’s knowledge for a public good can dramatically affect their valuation for it: treatment causes an increase of $150-$200 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states.

New insights into the phylogenetics and biogeography of Arum (Araceae): unravelling its evolutionary history

The heat- and odour-producing genus Arum (Araceae) has interested scientists for centuries. This long-term interest has allowed a deep knowledge of some complex processes, such as the physiology and dynamics of its characteristic lure-and-trap pollination system, to be built up. However, mainly because of its large distributional range and high degree of morphological variation, species' limits and relationships are still under discussion. Today, the genus comprises 28 species subdivided into two subgenera, two sections and six subsections. In this study, the phylogeny of the genus is inferred on the basis of four plastid regions, and the evolution of several morphological characters is investigated. Our phylogenetic hypothesis is not in agreement with the current infrageneric classification of the genus and challenges the monophyly of several species. This demonstrates the need for a new infrageneric classification based on characters reflecting the evolution of this enigmatic genus. To investigate the biogeography of Arum deeply, further spatiotemporal analyses were performed, addressing the importance of the Mediterranean basin in the diversification of Arum. Our results suggest that its centre of origin was the European-Aegean region, and that major diversification happened during the last 10 Myr.

Measuring Tax Complexity

This paper critically examines a number of issues relating to the measurement of tax complexity. It starts with an analysis of the concept of tax complexity, distinguishing tax design complexity and operational complexity. It considers the consequences/costs of complexity, and then examines the rationale for measuring complexity. Finally it applies the analysis to an examination of an index of complexity developed by the UK Office of Tax Simplification (OTS).