Profinite algebras and affine boundedness

We prove a characterization of profinite algebras, i.e., topological algebras that are isomorphic to a projective limit of finite discrete algebras. In general profiniteness concerns both the topological and algebraic characteristics of a topological algebra, whereas for topological groups, rings, semigroups, and distributive lattices, profiniteness turns out to be a purely topological property as it is is equivalent to the underlying topological space being a Stone space. Condensing the core idea of those classical results, we introduce the concept of affine boundedness for an arbitrary universal algebra and show that for an affinely bounded topological algebra over a compact signature profiniteness is equivalent to the underlying topological space being a Stone space. Since groups, semigroups, rings, and distributive lattices are indeed affinely bounded algebras over finite signatures, all these known cases arise as special instances of our result. Furthermore, we present some additional applications concerning topological semirings and their modules, as well as distributive associative algebras. We also deduce that any affinely bounded simple compact algebra over a compact signature is either connected or finite. Towards proving the main result, we also establish that any topological algebra is profinite if and only if its underlying space is a Stone space and its translation monoid is equicontinuous.Comment: 16 pages; final version, to appear in Advances in Mathematic

Resonant scattering in graphene with a gate-defined chaotic quantum dot

We investigate the conductance of an undoped graphene sheet with two metallic contacts and an electrostatically gated island (quantum dot) between the contacts. Our analysis is based on the Matrix Green Function formalism, which was recently adapted to graphene by Titov {\em et al.} [Phys.\ Rev.\ Lett.\ {\bf 104}, 076802 (2010)]. We find pronounced differences between the case of a stadium-shaped dot (which has chaotic classical dynamics) and a disc-shaped dot (which has integrable classical dynamics) in the limit that the dot size is small in comparison to the distance between the contacts. In particular, for the stadium-shaped dot the two-terminal conductance shows Fano resonances as a function of the gate voltage, which cross-over to Breit-Wigner resonances only in the limit of completely separated resonances, whereas for a disc-shaped dot sharp Breit-Wigner resonances resulting from higher angular momentum remain present throughout.Comment: 12 pages, 4 figure

Learning Under Ambiguity

This paper considers learning when the distinction between risk and ambiguity (Knightian uncertainty) matters. Working within the framework of recursive multiple-priors utility, the paper formulates a counterpart of the Bayesian model of learning about an uncertain parameter from conditionally i.i.d. signals. Ambiguous signals capture responses to information that cannot be captured by noisy signals. They induce nonmonotonic changes in agent confidence and prevent ambiguity from vanishing in the limit. In a dynamic portfolio choice model, learning about ambiguous returns leads to endogenous stock market participation costs that depend on past market performance. Hedging of ambiguity provides a new reason why the investment horizon matters for portfolio choice.ambiguity, learning, noisy signals, ambiguous signals, quality information, portfolio choice, portfolio diversification, Ellsberg Paradox

Momentum traders in the housing market: survey evidence and a search model

This paper studies household beliefs during the recent US housing boom. To characterize the heterogeneity in households’ views about housing and the economy, we perform a cluster analysis on survey responses at different stages of the boom. The estimation always finds a small cluster of households who believe it is a good time to buy a house because house prices will rise further. The size of this “momentum” cluster doubled towards the end of the boom. We also provide a simple search model of the housing market to show how a small number of optimistic investors can have a large effect on prices without buying a large share of the housing stock. ; This paper is an extension of Monika Piazzesi's and Martin Schneider's work while they were in the Research Department of the Federal Reserve Bank of Minneapolis.Housing ; Inflation (Finance) ; Interest rates

Every simple compact semiring is finite

A Hausdorff topological semiring is called simple if every non-zero continuous homomorphism into another Hausdorff topological semiring is injective. Classical work by Anzai and Kaplansky implies that any simple compact ring is finite. We generalize this result by proving that every simple compact semiring is finite, i.e., every infinite compact semiring admits a proper non-trivial quotient.Comment: 6 page

Ambiguity, Information Quality and Asset Pricing

When ambiguity averse investors process news of uncertain quality, they act as if they take a worst-case assessment of quality. As a result, they react more strongly to bad news than to good news. They also dislike assets for which information quality is poor, especially when the underlying fundamentals are volatile. These effects induce skewness in asset returns and induce ambiguity premia that depend on idiosyncratic risk in fundamentals. Moreover, shocks to information quality can have persistent negative effects on prices even if fundamentals do not change. This helps to explain the reaction of markets to events like 9/11/2001.ambiguity, information quality, asset pricing, idiosyncratic risk, negatively skewed returns