Two-sided learning in New Keynesian models: Dynamics, (lack of) convergence and the value of information

This paper investigates the role of learning by private agents and the central bank(two-sided learning) in a New Keynesian framework in which both sides of the economyhave asymmetric and imperfect knowledge about the true data generating process. Weassume that all agents employ the data that they observe (which may be distinct fordifferent sets of agents) to form beliefs about unknown aspects of the true model ofthe economy, use their beliefs to decide on actions, and revise these beliefs througha statistical learning algorithm as new information becomes available. We study theshort-run dynamics of our model and derive its policy recommendations, particularlywith respect to central bank communications. We demonstrate that two-sided learningcan generate substantial increases in volatility and persistence, and alter the behaviorof the variables in the model in a significant way. Our simulations do not convergeto a symmetric rational expectations equilibrium and we highlight one source thatinvalidates the convergence results of Marcet and Sargent (1989). Finally, we identifya novel aspect of central bank communication in models of learning: communicationcan be harmful if the central bank's model is substantially mis-specified.

Rules or consequences? The role of ethical mindsets in moral dynamics

Recent research on the dynamics of moral behavior has documented two contrastingphenomena - moral consistency and moral balancing. Moral balancing refers to thephenomenon whereby behaving (un)ethically decreases the likelihood of doing so againat a later time. Moral consistency describes the opposite pattern - engaging in(un)ethical behavior increases the likelihood of doing so later on. Three studies supportthe hypothesis that individuals' ethical mindset (i.e., outcome-based versus rule-based)moderates the impact of an initial (un)ethical act on the likelihood of behaving ethicallyin a subsequent occasion. More specifically, an outcome-based mindset facilitates moralbalancing and a rule-based mindset facilitates moral consistency.

Biomechanical characterization and in vitro mechanical injury of elderly human femoral head cartilage: comparison to adult bovine humeral head cartilage.

OBJECTIVES: In vitro mechanical injury of articular cartilage is useful to identify events associated with development of post-traumatic osteoarthritis (OA). To date, many in vitro injury models have used animal cartilage despite the greater clinical relevance of human cartilage. We aimed to characterize a new in vitro injury model using elderly human femoral head cartilage and compare its behavior to that of an existing model with adult bovine humeral head cartilage. DESIGN: Mechanical properties of human and bovine cartilage disks were characterized by elastic modulus and hydraulic permeability in radially confined axial compression, and by Young's modulus, Poisson's ratio, and direction-dependent radial strain in unconfined compression. Biochemical composition was assessed in terms of tissue water, solid, and glycosaminoglycan (GAG) contents. Responses to mechanical injury were assessed by observation of macroscopic superficial tissue cracks and histological measurements of cell viability following single injurious ramp loads at 7 or 70%/s strain rate to 3 or 14 MPa peak stress. RESULTS: Confined compression moduli and Young's moduli were greater in elderly human femoral cartilage vs adult bovine humeral cartilage whereas hydraulic permeability was less. Radial deformations of axially compressed explant disks were more anisotropic (direction-dependent) for the human cartilage. In both cartilage sources, tissue cracking and associated cell death during injurious loading was common for 14 MPa peak stress at both strain rates. CONCLUSION: Despite differences in mechanical properties, acute damage induced by injurious loading was similar in both elderly human femoral cartilage and adult bovine humeral cartilage, supporting the clinical relevance of animal-based cartilage injury models. However, inherent structural differences such as cell density may influence subsequent cell-mediated responses to injurious loading and affect the development of OA.

The dynamics of research networks in Brite-Euram

Network formation within the BRITE--EURAM program is investigated.Wedescribe the role of the hub of the network, which is defined as the setofmain contractors that account for most of the participations. We studytheeffects that the conflict of objectives within European research fundingbetween pre-competitive research vs. European cohesion has on theformationof networks and on the relationship between different partnersof the network. \\A panel data set is constructed including the second and third frameworkof theBrite--Euram program. A model of joint production of research results isusedto test for changes in the behavior of partners within the twoframeworks. \\The main findings are that participations are very concentrated, that isasmall group of institutions account for most of the participations, butgoingfrom the second to the third framework the presence of subcontractorsand singleparticipants increases substantially. This result is reinforced by the factthat main contractors receive smaller spill-ins within networks, butspill-insincrease from the second to the third framework.

Stochastic uncoupled dynamics and Nash equilibrium

In this paper we consider dynamic processes, in repeated games, that are subject to the natural informational restriction of uncoupledness. We study the almost sure convergence to Nash equilibria, and present a number of possibility and impossibility results. Basically, we show that if in addition to random moves some recall is introduced, then successful search procedures that are uncoupled can be devised. In particular, to get almost sure convergence to pure Nash equilibria when these exist, it su±ces to recall the last two periods of play.

Dynamics of the control of Aedes (Stegomyia) aegypti Linnaeus (Diptera, Culicidae) by Bacillus thuringiensis var israelensis, related with temperature, density and concentration of insecticide

The dynamics of the control of Aedes (Stegomyia) aegypti Linnaeus, (Diptera, Culicidae) by Bacillus thuringiensis var israelensis has been related with the temperature, density and concentration of the insecticide. A mathematical model for biological control of Aedes aegypti with Bacillus thuringiensis var israelensis (Bti) was constructed by using data from the literature regarding the biology of the vector. The life cycle was described by differential equations. Lethal concentrations (LC50 and LC95) of Bti were determined in the laboratory under different experimental conditions. Temperature, colony, larvae density and bioinsecticide concentration presented marked differences in the analysis of the whole set of variables; although when analyzed individually, only the temperature and concentration showed changes. The simulations indicated an inverse relationship between temperature and mosquito population, nonetheless, faster growth of populations is reached at higher temperatures. As conclusion, the model suggests the use of integrated control strategies for immature and adult mosquitoes in order to achieve a reduction of Aedes aegypti.

New record of Pterotaenia fasciata (Wiedemann) (Diptera, Ulidiidae) in Brazil, a probably mechanical vector of enteric bacteria

Pterotaenia fasciata is commonly recorded in rural areas in Argentina, but during a Diptera survey study developed in a reservoir which retains storm water from polluted canals in an urban area of Taboão da Serra municipality, SP, Brazil, we could capture P. fasciata adults. Enteric bacteria Escherichia coli T. Escherich, 1885 and Proteus sp. were isolated from P. fasciata collected in traps inside the reservoir and around it. Fecal coliforms and E. coli were found in the water of the reservoir. These records suggest that a high abundance of this species at urban areas with inadequate sewage canals should reveal these muscoid dipterans as mechanical vectors of enteric bacteria.

Financing constraints, irreversibility and investment dynamics

We develop a model of an industry with many heterogeneous firms that face both financingconstraints and irreversibility constraints. The financing constraint implies that firmscannot borrow unless the debt is secured by collateral; the irreversibility constraint thatthey can only sell their fixed capital by selling their business. We use this model to examinethe cyclical behavior of aggregate fixed investment, variable capital investment, and outputin the presence of persistent idiosyncratic and aggregate shocks. Our model yields threemain results. First, the effect of the irreversibility constraint on fixed capital investmentis reinforced by the financing constraint. Second, the effect of the financing constraint onvariable capital investment is reinforced by the irreversibility constraint. Finally, the interactionbetween the two constraints is key for explaining why input inventories and materialdeliveries of US manufacturing firms are so volatile and procyclical, and also why they arehighly asymmetrical over the business cycle.

Implementation, elimination of weakly dominated strategies and evolutionary dynamics

This paper is concerned with the realism of mechanisms that implementsocial choice functions in the traditional sense. Will agents actually playthe equilibrium assumed by the analysis? As an example, we study theconvergence and stability properties of Sj\"ostr\"om's (1994) mechanism, onthe assumption that boundedly rational players find their way to equilibriumusing monotonic learning dynamics and also with fictitious play. Thismechanism implements most social choice functions in economic environmentsusing as a solution concept the iterated elimination of weakly dominatedstrategies (only one round of deletion of weakly dominated strategies isneeded). There are, however, many sets of Nash equilibria whose payoffs maybe very different from those desired by the social choice function. Withmonotonic dynamics we show that many equilibria in all the sets ofequilibria we describe are the limit points of trajectories that havecompletely mixed initial conditions. The initial conditions that lead tothese equilibria need not be very close to the limiting point. Furthermore,even if the dynamics converge to the ``right'' set of equilibria, it stillcan converge to quite a poor outcome in welfare terms. With fictitious play,if the agents have completely mixed prior beliefs, beliefs and play convergeto the outcome the planner wants to implement.