The insurance function of contracts

One of the central problems in contract law is to define the frontier between legal and illegal breaches of promises. The distinction between good and bad faith is perhaps the conceptual tool most commonly used to tell one from the other. Lawyers spend a lot of energy trying to frame better definitions of the concepts of good and bad faith based on principles of ethics or justice, but often pay much less attention to theories dealing with the incentives that can engender good faith behavior in contractual relationships. By describing the economics of what Stiglitz defined as “explicit” and “implicit” insurance, I highlight the “insurance function” hidden in any promise with basically no mathematical notation. My aim is to render the subject intelligible and useful to lawyers with little familiarity with economics.

Optimal provision of implicit and explicit incentives in asset management contracts

This paper investigates the importance of the fiow of funds as an implicit incetive provided by investors to portfolio managers in a two-period relationship. We show that the fiow of funds is a powerful incentive in an asset management contract. We build a binomial moral hazard model to explain the main trade-ofIs in the relationship between fiow, fees and performance. The main assumption is that efIort depend" on the combination of implicit and explicit incentives while the probability distrioutioll function of returns depends on efIort. In the case of full commitment, the investor's relevant trade-ofI is to give up expected return in the second period vis-à-vis to induce efIort in the first período The more concerned the investor is with today's payoff. the more willing he will be to give up expected return in the following periods. That is. in the second period, the investor penalizes observed low returns by withdrawing resources from non-performing portfolio managers. Besides, he pays performance fee when the observed excess return is positive. When commitment is not a plausible hypothesis, we consider that the investor also learns some symmetríc and imperfect information about the ability of the manager to generate positive excess returno In this case, observed returns reveal ability as well as efIort choices exerted by the portfolio manager. We show that implicit incentives can explain the fiow-performance relationship and, conversely, endogenous expected return determines incentives provision and define their optimal leveIs. We provide a numerical solution in Matlab that characterize these results.

Implicit differential equations with impasse singularities and singular perturbation problems

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

A generalized alternating-direction implicit scheme for incompressible magnetohydrodynamic viscous flows at low magnetic Reynolds number

This paper presents numerical simulations of incompressible fluid flows in the presence of a magnetic field at low magnetic Reynolds number. The equations governing the flow are the Navier-Stokes equations of fluid motion coupled with Maxwell's equations of electromagnetics. The study of fluid flows under the influence of a magnetic field and with no free electric charges or electric fields is known as magnetohydrodynamics. The magnetohydrodynamics approximation is considered for the formulation of the non-dimensional problem and for the characterization of similarity parameters. A finite-difference technique is used to discretize the equations. In particular, an extension of the generalized Peaceman and Rachford alternating-direction implicit (ADI) scheme for simulating two-dimensional fluid flows is presented. The discretized conservation equations are solved in stream function-vorticity formulation. We compare the ADI and generalized ADI schemes, and show that the latter is more efficient in simulating low Reynolds number and magnetic Reynolds number problems. Numerical results demonstrating the applicability of this technique are also presented. The simulation of incompressible magneto hydrodynamic fluid flows is illustrated by numerical solution for two-dimensional cases. (c) 2007 Elsevier B.V. All rights reserved.

On the solvability of implicit differential inclusions

In the paper, the set-valued covering mappings are studied. The statements on solvability, solution estimates, and well-posedness of inclusions with conditionally covering mappings are proved. The results obtained are applied to the investigation of differential inclusions unsolved for the unknown function. The statements on solvability, solution estimates, and well-posedness of these inclusions are derived.

Probabilistic Recursion Theory and Implicit Computational Complexity

In this thesis we provide a characterization of probabilistic computation in itself, from a recursion-theoretical perspective, without reducing it to deterministic computation. More specifically, we show that probabilistic computable functions, i.e., those functions which are computed by Probabilistic Turing Machines (PTM), can be characterized by a natural generalization of Kleene's partial recursive functions which includes, among initial functions, one that returns identity or successor with probability 1/2. We then prove the equi-expressivity of the obtained algebra and the class of functions computed by PTMs. In the the second part of the thesis we investigate the relations existing between our recursion-theoretical framework and sub-recursive classes, in the spirit of Implicit Computational Complexity. More precisely, endowing predicative recurrence with a random base function is proved to lead to a characterization of polynomial-time computable probabilistic functions.

Stress effects on working memory, explicit memory, and implicit memory for neutral and emotional stimuli in healthy men

Stress is a strong modulator of memory function. However, memory is not a unitary process and stress seems to exert different effects depending on the memory type under study. Here, we explored the impact of social stress on different aspects of human memory, including tests for explicit memory and working memory (for neutral materials), as well as implicit memory (perceptual priming, contextual priming and classical conditioning for emotional stimuli). A total of 35 young adult male students were randomly assigned to either the stress or the control group, with stress being induced by the Trier Social Stress Test (TSST). Salivary cortisol levels were assessed repeatedly throughout the experiment to validate stress effects. The results support previous evidence indicating complex effects of stress on different types of memory: A pronounced working memory deficit was associated with exposure to stress. No performance differences between groups of stressed and unstressed subjects were observed in verbal explicit memory (but note that learning and recall took place within 1 h and immediately following stress) or in implicit memory for neutral stimuli. Stress enhanced classical conditioning for negative but not positive stimuli. In addition, stress improved spatial explicit memory. These results reinforce the view that acute stress can be highly disruptive for working memory processing. They provide new evidence for the facilitating effects of stress on implicit memory for negative emotional materials. Our findings are discussed with respect to their potential relevance for psychiatric disorders, such as post traumatic stress disorder.

Low reliability of perceptual priming: consequences for the interpretation of functional dissociations between explicit and implicit memory

In this study, three experiments are presented that investigate the reliability of memory measures. In Experiment 1, the well-known dissociation between explicit (recall, recognition) and implicit memory (picture clarification) as a function of age in a sample of 335 persons aged between 65 and 95 was replicated. Test-retest reliability was significantly lower in implicit than in explicit measures. In Experiment 2, parallel-test reliabilities in a student sample confirmed the finding of Experiment 1. In Experiment 3, the reliability of cued recall and word stem completion was investigated. There were significant priming effects and a dissociation between explicit and implicit memory as a function of levels of processing. However, the reliability of implicit memory measures was again substantially lower than in explicit tests in all test conditions. As a consequence, differential reliabilities of direct and indirect memory tests should be considered as a possible determinant of dissociations between explicit and implicit memory as a function of experimental or quasi-experimental manipulations.

Explicit and Implicit Methods In Solving Differential Equations

Differential equations are equations that involve an unknown function and derivatives. Euler's method are efficient methods to yield fairly accurate approximations of the actual solutions. By manipulating such methods, one can find ways to provide good approximations compared to the exact solution of parabolic partial differential equations and nonlinear parabolic differential equations.

When is an image a health claim? A false-recollection method to detect implicit inferences about products' health benefits

Objective: Images on food and dietary supplement packaging might lead people to infer (appropriately or inappropriately) certain health benefits of those products. Research on this issue largely involves direct questions, which could (a) elicit inferences that would not be made unprompted, and (b) fail to capture inferences made implicitly. Using a novel memory-based method, in the present research, we explored whether packaging imagery elicits health inferences without prompting, and the extent to which these inferences are made implicitly. Method: In 3 experiments, participants saw fictional product packages accompanied by written claims. Some packages contained an image that implied a health-related function (e.g., a brain), and some contained no image. Participants studied these packages and claims, and subsequently their memory for seen and unseen claims were tested. Results: When a health image was featured on a package, participants often subsequently recognized health claims that—despite being implied by the image—were not truly presented. In Experiment 2, these recognition errors persisted despite an explicit warning against treating the images as informative. In Experiment 3, these findings were replicated in a large consumer sample from 5 European countries, and with a cued-recall test. Conclusion: These findings confirm that images can act as health claims, by leading people to infer health benefits without prompting. These inferences appear often to be implicit, and could therefore be highly pervasive. The data underscore the importance of regulating imagery on product packaging; memory-based methods represent innovative ways to measure how leading (or misleading) specific images can be. (PsycINFO Database Record (c) 2016 APA, all rights reserved)

Pricing in the Hospitality Industry: An Implicit Markets Approach

The authors apply economic theory to an analysis of industry pricing. Data from a cross-section of San Francisco hotels is used to estimate the implicit prices of common hotel amenities, and a procedure for using these prices to estimate consumer demands for the attributes is outlined. The authors then suggest implications for hotel decision makers. While the results presented here should not be generalized to other markets, the methodology is easily adapted to other geographic areas.

EFFECTIVE FUNCTION CHOICE IN THE R SCRIPTING LANGUAGE

This project examines the current available work on the explicit and implicit parallelization of the R scripting language and reports on experimental findings for the development of a model for predicting effective points for automatic parallelization to be performed, based upon input data sizes and function complexity. After finding or creating a series of custom benchmarks, an interval based on data size and time complexity where replacement becomes a viable option was found; specifically between O(N) and O(N3) exclusive. As data size increases, the benefits of parallel processing become more apparent and a point is reached where those benefits outweigh the costs in memory transfer time. Based on our observations, this point can be predicted with a fair amount of accuracy using regression on a sample of approximately ten data sizes spread evenly between a system determined minimum and maximum size.

An approximate method for the solution of an influence function foil rolling model

Fleck and Johnson (Int. J. Mech. Sci. 29 (1987) 507) and Fleck et al. (Proc. Inst. Mech. Eng. 206 (1992) 119) have developed foil rolling models which allow for large deformations in the roll profile, including the possibility that the rolls flatten completely. However, these models require computationally expensive iterative solution techniques. A new approach to the approximate solution of the Fleck et al. (1992) Influence Function Model has been developed using both analytic and approximation techniques. The numerical difficulties arising from solving an integral equation in the flattened region have been reduced by applying an Inverse Hilbert Transform to get an analytic expression for the pressure. The method described in this paper is applicable to cases where there is or there is not a flat region.

A second order control-volume finite-element least-squares strategy for simulating diffusion in strongly anisotropic media

An unstructured mesh �nite volume discretisation method for simulating di�usion in anisotropic media in two-dimensional space is discussed. This technique is considered as an extension of the fully implicit hybrid control-volume �nite-element method and it retains the local continuity of the ux at the control volume faces. A least squares function recon- struction technique together with a new ux decomposition strategy is used to obtain an accurate ux approximation at the control volume face, ensuring that the overall accuracy of the spatial discretisation maintains second order. This paper highlights that the new technique coincides with the traditional shape function technique when the correction term is neglected and that it signi�cantly increases the accuracy of the previous linear scheme on coarse meshes when applied to media that exhibit very strong to extreme anisotropy ratios. It is concluded that the method can be used on both regular and irregular meshes, and appears independent of the mesh quality.