Application of theoretical models to financial innovation

The present paper is aimed at providing a general strategic overview of the existing theoretical models that have applications in the field of financial innovation. Whereas most financialdevelopments have relied upon traditional economic tools, a new stream of research is defining a novel paradigm in which mathematical models from diverse scientific disciplines are being applied to conceptualize and explain economic and financial behavior. Indeed, terms such as ‘econophysics’ or ‘quantum finance’ have recently appeared to embrace efforts in this direction. As a first contact with such research, the project will present a brief description of some of the main theoretical models that have applications in finance and economics, and will try to present, if possible, potential new applications to particular areas in financial analysis, or new applicable models. As a result, emphasiswill be put on the implications of this research for the financial sector and its future dynamics.

The underestimation of compliance to direct help requests explained by adaptive sampling

Helping behavior is any intentional behavior that benefits another living being or group (Hogg & Vaughan, 2010). People tend to underestimate the probability that others will comply with their direct requests for help (Flynn & Lake, 2008). This implies that when they need help, they will assess the probability of getting it (De Paulo, 1982, cited in Flynn & Lake, 2008) and then they will tend to estimate one that is actually lower than the real chance, so they may not even consider worth asking for it. Existing explanations for this phenomenon attribute it to a mistaken cost computation by the help seeker, who will emphasize the instrumental cost of “saying yes”, ignoring that the potential helper also needs to take into account the social cost of saying “no”. And the truth is that, especially in face-to-face interactions, the discomfort caused by refusing to help can be very high. In short, help seekers tend to fail to realize that it might be more costly to refuse to comply with a help request rather than accepting. A similar effect has been observed when estimating trustworthiness of people. Fetchenhauer and Dunning (2010) showed that people also tend to underestimate it. This bias is reduced when, instead of asymmetric feedback (getting feedback only when deciding to trust the other person), symmetric feedback (always given) was provided. This cause could as well be applicable to help seeking as people only receive feedback when they actually make their request but not otherwise. Fazio, Shook, and Eiser (2004) studied something that could be reinforcing these outcomes: Learning asymmetries. By means of a computer game called BeanFest, they showed that people learn better about negatively valenced objects (beans in this case) than about positively valenced ones. This learning asymmetry esteemed from “information gain being contingent on approach behavior” (p. 293), which could be identified with what Fetchenhauer and Dunning mention as ‘asymmetric feedback’, and hence also with help requests. Fazio et al. also found a generalization asymmetry in favor of negative attitudes versus positive ones. They attributed it to a negativity bias that “weights resemblance to a known negative more heavily than resemblance to a positive” (p. 300). Applied to help seeking scenarios, this would mean that when facing an unknown situation, people would tend to generalize and infer that is more likely that they get a negative rather than a positive outcome from it, so, along with what it was said before, people will be more inclined to think that they will get a “no” when requesting help. Denrell and Le Mens (2011) present a different perspective when trying to explain judgment biases in general. They deviate from the classical inappropriate information processing (depicted among other by Fiske & Taylor, 2007, and Tversky & Kahneman, 1974) and explain this in terms of ‘adaptive sampling’. Adaptive sampling is a sampling mechanism in which the selection of sample items is conditioned by the values of the variable of interest previously observed (Thompson, 2011). Sampling adaptively allows individuals to safeguard themselves from experiences they went through once and turned out to lay negative outcomes. However, it also prevents them from giving a second chance to those experiences to get an updated outcome that could maybe turn into a positive one, a more positive one, or just one that regresses to the mean, whatever direction that implies. That, as Denrell and Le Mens (2011) explained, makes sense: If you go to a restaurant, and you did not like the food, you do not choose that restaurant again. This is what we think could be happening when asking for help: When we get a “no”, we stop asking. And here, we want to provide a complementary explanation for the underestimation of the probability that others comply with our direct help requests based on adaptive sampling. First, we will develop and explain a model that represents the theory. Later on, we will test it empirically by means of experiments, and will elaborate on the analysis of its results.

Pensions and procrastination : how can employers help their employees save for the future?

In this paper I show that employees tend to procrastinate when they are expected to decide whether or not they would like to save using the defined contribution pension scheme offered by their employer. By auto-enrolling the employees or asking them to decide before a given deadline, employers can mitigate some of the problems caused by employee procrastination. However both of these mechanisms present their own problems, caused by default stickiness and other issues, so I discuss how employers can decide which is the right mechanism to use depending on the characteristics of their employees, and how to minimize the problems these mechanisms can cause.

An insight into co-operativism

The concept of co-operativism is analysed in this report. As an introduction to the subject, the values that socially friendly businesses work with are mentioned, as well as, the basic differences with regard to capitalist companies. In order to broaden the model, seven basic principles that drive such companies are analysed. Recently, due to the economic crisis, many capitalist companies have changed their way of running the business and have opted for cooperatives. Therefore, the steps they have to follow to become part of this view will be considered. So as to introduce a more critical view, benefits and drawbacks of cooperative companies will be borne in mind. In addition, no theoretical model is complete if real examples are not provided, thus in the final part, four companies will be studied. The first one being a company that has always been part of a group of cooperatives and which has enjoyed positive results all over; the second one, a company that has experienced the benefits of leaving the group; the third one, the cornerstone of such group, whose effort to relaunch the company have failed; and the final one, an acquired company whose future is uncertain due to its parent company's decline. To conclude, the final section is going to be devoted to heighten the problems that cooperatives have and which may have compromised their status as alternative models to capitalism.

Genome-wide association study identifies six new loci influencing pulse pressure and mean arterial pressure.

Numerous genetic loci have been associated with systolic blood pressure (SBP) and diastolic blood pressure (DBP) in Europeans. We now report genome-wide association studies of pulse pressure (PP) and mean arterial pressure (MAP). In discovery (N = 74,064) and follow-up studies (N = 48,607), we identified at genome-wide significance (P = 2.7 × 10(-8) to P = 2.3 × 10(-13)) four new PP loci (at 4q12 near CHIC2, 7q22.3 near PIK3CG, 8q24.12 in NOV and 11q24.3 near ADAMTS8), two new MAP loci (3p21.31 in MAP4 and 10q25.3 near ADRB1) and one locus associated with both of these traits (2q24.3 near FIGN) that has also recently been associated with SBP in east Asians. For three of the new PP loci, the estimated effect for SBP was opposite of that for DBP, in contrast to the majority of common SBP- and DBP-associated variants, which show concordant effects on both traits. These findings suggest new genetic pathways underlying blood pressure variation, some of which may differentially influence SBP and DBP.

Liiketoiminta- ja teknologiaosaaminen sekä yliopistojen yhteiskunnallinen rooli

Kirjoitus perustuu esitykseen tammikuussa Tieteen päivillä 2005 sessiossa "Liiketoiminta- ja teknologiaosaaminen suomalaisen hyvinvointiyhteiskunnan takaajina" (14.1.).

GWAS of 126,559 individuals identifies genetic variants associated with educational attainment.

A genome-wide association study (GWAS) of educational attainment was conducted in a discovery sample of 101,069 individuals and a replication sample of 25,490. Three independent single-nucleotide polymorphisms (SNPs) are genome-wide significant (rs9320913, rs11584700, rs4851266), and all three replicate. Estimated effects sizes are small (coefficient of determination R(2) ≈ 0.02%), approximately 1 month of schooling per allele. A linear polygenic score from all measured SNPs accounts for ≈2% of the variance in both educational attainment and cognitive function. Genes in the region of the loci have previously been associated with health, cognitive, and central nervous system phenotypes, and bioinformatics analyses suggest the involvement of the anterior caudate nucleus. These findings provide promising candidate SNPs for follow-up work, and our effect size estimates can anchor power analyses in social-science genetics.