The Network of U.S. Mutual Fund Investments: Diversification, Similarity and Fragility throughout the Global Financial Crisis

Network theory proved recently to be useful in the quantification of many properties of financial systems. The analysis of the structure of investment portfolios is a major application since their eventual correlation and overlap impact the actual risk diversification by individual investors. We nvestigate the bipartite network of US mutual fund portfolios and their assets. We follow its evolution during the Global Financial Crisis and analyse the interplay between diversification, as understood in classical portfolio theory, and similarity of the investments of different funds. We show that, on average, portfolios have become more diversified and less similar during the crisis. However, we also find that large overlap is far more likely than expected from models of random allocation of investments. This indicates the existence of strong correlations between fund portfolio strategies. We introduce a simplified model of propagation of financial shocks, that we exploit to show that a systemic risk component origins from the similarity of portfolios. The network is still vulnerable after crisis because of this effect, despite the increase in the diversification of portfolios. Our results indicate that diversification may even increase systemic risk when funds diversify in the same way. Diversification and similarity can play antagonistic roles and the trade-off between the two should be taken into account to properly assess systemic risk

Evidence for Mixed Rationalities in Preference Formation

Understanding the mechanisms underlying the formation of cultural traits is an open challenge. This is intimately connected to cultural dynamics, which has been the focus of a variety of quantitative models. Recent studies have emphasized the importance of connecting thosemodels to empirically accessible snapshots of cultural dynamics. In particular, it has been suggested that empirical cultural states, which differ systematically from randomized counterparts, exhibit properties that are universally present. Hence, a question about the mechanism responsible for the observed patterns naturally arises. This study proposes a stochastic structural model for generating cultural states that retain those robust empirical properties. One ingredient of the model assumes that every individual’s set of traits is partly dictated by one of several universal “rationalities,” informally postulated by several social science theories.The second, new ingredient assumes that, apart from a dominant rationality, each individual also has a certain exposure to the other rationalities. It is shown that both ingredients are required for reproducing the empirical regularities. This suggests that the effects of cultural dynamics in the real world can be described as an interplay of multiple, mixing rationalities, providing indirect evidence for the class of social science theories postulating such a mixing

The smile curve at the firm level: Where value is added along supply chains

In this paper, we investigate at the firm-level where value is added along supply chains on a sample of about 2 million firms in the European Union. In line with the hypothesis of a ‘smile curve’, we detect a non-linear U-shaped relationship between the value added content of a firm and its distance from final consumption. Tasks at the early and late stages of the supply chains generate higher value added, possibly due to a higher knowledge-intensity, after controlling for firm heterogeneity. Importantly, our work shows that it is possible to exploit firm-level databases for an empirical microfoundation of value generation, which is useful for understanding the possibly unequal benefits of participating in global value chains

Transfer of Audio-Visual Temporal Training to Temporal and Spatial Audio-Visual Tasks

Temporal and spatial characteristics of sensory inputs are fundamental to multisensory integration because they provide probabilistic information as to whether or not multiple sensory inputs belong to the same event. The multisensory temporal binding window defines the time range within which two stimuli of different sensory modalities are merged into one percept and has been shown to depend on training. The aim of the present study was to evaluate the role of the training procedure for improving multisensory temporal discrimination and to test for a possible transfer of training to other multisensory tasks. Participants were trained over five sessions in a two-alternative forced-choice simultaneity judgment task. The task difficulty of each trial was either at each participant’s threshold (adaptive group) or randomly chosen (control group). A possible transfer of improved multisensory temporal discrimination on multisensory binding was tested with a redundant signal paradigm in which the temporal alignment of auditory and visual stimuli was systematically varied. Moreover, the size of the spatial audio-visual ventriloquist effect was assessed. Adaptive training resulted in faster improvements compared to the control condition. Transfer effects were found for both tasks: The processing speed of auditory inputs and the size of the ventriloquist effect increased in the adaptive group following the training. We suggest that the relative precision of the temporal and spatial features of a cross-modal stimulus is weighted during multisensory integration. Thus, changes in the precision of temporal processing are expected to enhance the likelihood of multisensory integration for temporally aligned cross-modal stimuli

Ultrametricity increases the predictability of cultural dynamics

A quantitative understanding of societies requires useful combinations of empirical data and mathematical models. Models of cultural dynamics aim at explaining the emergence of culturally homogeneous groups through social influence. Traditionally, the initial cultural traits of individuals are chosen uniformly at random, the emphasis being on characterizing the model outcomes that are independent of these (`annealed') initial conditions. Here, motivated by an increasing interest in forecasting social behavior in the real world, we reverse the point of view and focus on the effect of specific (`quenched') initial conditions, including those obtained from real data, on the final cultural state. We study the predictability, rigorously defined in an information-theoretic sense, of the \emphsocial content of the final cultural groups (i.e. who ends up in which group) from the knowledge of the initial cultural traits. We find that, as compared to random and shuffled initial conditions, the hierarchical ultrametric-like organization of empirical cultural states significantly increases the predictability of the final social content by largely confining cultural convergence within the lower levels of the hierarchy. Moreover, predictability correlates with the compatibility of short-term social coordination and long-term cultural diversity, a property that has been recently found to be strong and robust in empirical data. We also introduce a null model generating initial conditions that retain the ultrametric representation of real data. Using this ultrametric model, predictability is highly enhanced with respect to the random and shuffled cases, confirming the usefulness of the empirical hierarchical organization of culture for forecasting the outcome of social influence models

The interplay of cultural intolerance and action-assortativity for the emergence of cooperation and homophily

This paper investigates the emergence of cooperation in a heterogeneous population that is divided into two cultural groups. Agents are randomly matched in pairs to engage in a prisoner dilemma. The matching process is assortative in actions, that is, cooperators are more likely to be matched with cooperators, defectors are more likely to be matched with defectors. Agents exhibit a form of cultural intolerance: when two agents of different cultures are matched, they suffer a cost due to their cultural differences. We find that when cultural intolerance is sufficiently strong, homophily emerges together with perfect correlation between culture and behavior: all agents from one cultural group cooperate, while all agents from the other cultural group defect, and interactions among agents within the same cultural group are more frequent. The relation between cultural intolerance and societal welfare is non-monotonic. In particular, stronger cultural intolerance can increase cooperation when action-assortativity is weak, while it can increase defection when action-assortativity is strong. Moreover, everyone cooperating does not necessarily maximize total welfare unless cultural intolerance can be made sufficiently weak

The Global Health Networks: A Comparative Analysis of Tuberculosis, Malaria and Pneumonia Using Social Media Data

Global health networks (GHNs) of organizations fighting major health threats represent a useful strategy to respond to the challenge of mobilizing and coordinating different types of health organizations across borders toward a common goal. In this paper we reconstruct the GHNs of malaria, tuberculosis and pneumonia by creating a new unique database of health organizations from the official Twitter accounts of each organization. We use a majority voter Multi Naive Bayes classifier to discover, among the Twitter users, the ones that represent organizations or groups active in each disease area. We perform a social network analysis (SNA) of the global health networks (GHNs) to evaluate the structure of the network and the role and performance of the organizations in each network. We find evidence that the GHN of malaria, TBC and pneumonia are different in terms of performance and leadership, geographical coverage as well as Twitter popularity. Our analysis validate the use of social media to analyze GHNs, their effectiveness and to mobilize the global community toward global sustainable development

Consistency and Trends of Technological Innovations: A Network Approach to the International Patent Classification Data

Classifying patents by the technology areas they pertain is important to enable information search and facilitate policy analysis and socio-economic studies. Based on the OECD Triadic Patent Family database, this study constructs a cohort network based on the grouping of IPC subclasses in the same patent families, and a citation network based on citations between subclasses of patent families citing each other. This paper presents a systematic analysis approach which obtains naturally formed network clusters identified using a Lumped Markov Chain method, extracts community keys traceable over time, and investigates two important community characteristics: consistency and changing trends. The results are verified against several other methods, including a recent research measuring patent text similarity. The proposed method contributes to the literature a network-based approach to study the endogenous community properties of an exogenously devised classification system. The application of this method may improve accuracy and efficiency of the IPC search platform and help detect the emergence of new technologies

Fracture of solar-grade anisotropic polycrystalline Silicon: A combined phase field–cohesive zone model approach

This work presents a novel computational framework to simulate fracture events in brittle anisotropic polycrystalline materials at the microscopical level, with application to solar-grade polycrystalline Silicon. Quasi-static failure is modeled by combining the phase field approach of brittle fracture (for transgranular fracture) with the cohesive zone model for the grain boundaries (for intergranular fracture) through the generalization of the recent FE-based technique published in M. Paggi, J. Reinoso, Comput. Methods Appl. Mech. Engrg., 31 (2017) 145–172 to deal with anisotropic polycrystalline microstructures. The proposed model, which accounts for any anisotropic constitutive tensor for the grains depending on their preferential orientation, as well as an orientation-dependent fracture toughness, allows to simulate intergranular and transgranular crack growths in an efficient manner, with or without initial defects. One of the advantages of the current variational method is the fact that complex crack patterns in such materials are triggered without any user-intervention, being possible to account for the competition between both dissipative phenomena. In addition, further aspects with regard to the model parameters identification are discussed in reference to solar cells images obtained from transmitted light source. A series of representative numerical simulations is carried out to highlight the interplay between the different types of fracture occurring in solar-grade polycrystalline Silicon, and to assess the role of anisotropy on the crack path and on the apparent tensile strength of the material

International regulation of historic buildings and nationalism: the role of UNESCO

This article focuses on the (ambiguous) relationships between nationalism and international regulation of historic buildings, namely, the activity of UNESCO in this field. It studies two different forms of UNESCO intervention: the creation of a list of world heritage sites of outstanding universal value, which includes several historic cities and buildings; and UNESCO Recommendations aimed at protecting historic urban landscape. The article shows that UNESCO seems to favour both political and cultural forms of nationalism and can significantly affect the nationalistic use of historic buildings and, more broadly, affect on the very idea of Nation and nationalism