The Behavioral Paradox: Why Investor Irrationality Calls for Lighter and Simpler Financial Regulation

It is widely believed that behavioral economics justifies more intrusive regulation of financial markets, because people are not fully rational and need to be protected from their quirks. This Article challenges that belief. Firstly, insofar as people can be helped to make better choices, that goal can usually be achieved through light-touch regulations. Secondly, faulty perceptions about markets seem to be best corrected through market-based solutions. Thirdly, increasing regulation does not seem to solve problems caused by lack of market discipline, pricing inefficiencies, and financial innovation; better results may be achieved with freer markets and simpler rules. Fourthly, regulatory rule makers are subject to imperfect rationality, which tends to reduce the quality of regulatory intervention. Finally, regulatory complexity exacerbates the harmful effects of bounded rationality, whereas simple and stable rules give rise to positive learning effects

Heard It through the Grapevine: Traceability, Intelligence Cohort, and Collaborative Hazard Intelligence

abstract: Designing a hazard intelligence platform enables public agencies to organize diversity and manage complexity in collaborative partnerships. To maintain the integrity of the platform while preserving the prosocial ethos, understanding the dynamics of “non-regulatory supplements” to central governance is crucial. In conceptualization, social responsiveness is shaped by communicative actions, in which coordination is attained through negotiated agreements by way of the evaluation of validity claims. The dynamic processes involve information processing and knowledge sharing. The access and the use of collaborative intelligence can be examined by notions of traceability and intelligence cohort. Empirical evidence indicates that social traceability is statistical significant and positively associated with the improvement of collaborative performance. Moreover, social traceability positively contributes to the efficacy of technical traceability, but not vice versa. Furthermore, technical traceability significantly contributes to both moderate and high performance improvement; while social traceability is only significant for moderate performance improvement. Therefore, the social effect is limited and contingent. The results further suggest strategic considerations. Social significance: social traceability is the fundamental consideration to high cohort performance. Cocktail therapy: high cohort performance involves an integrative strategy with high social traceability and high technical traceability. Servant leadership: public agencies should exercise limited authority and perform a supporting role in the provision of appropriate technical traceability, while actively promoting social traceability in the system.Dissertation/ThesisDoctoral Dissertation Business Administration 201

Application of spin glass ideas in social sciences, economics and finance

Classical economics has developed an arsenal of methods, based on the idea of representative agents, to come up with precise numbers for next year's GDP, inflation and exchange rates, among (many) other things. Few, however, will disagree with the fact that the economy is a complex system, with a large number of strongly heterogeneous, interacting units of different types (firms, banks, households, public institutions) and different sizes. Now, the main issue in economics is precisely the emergent organization, cooperation and coordination of such a motley crowd of micro-units. Treating them as a unique ``representative'' firm or household clearly risks throwing the baby with the bathwater. As we have learnt from statistical physics, understanding and characterizing such emergent properties can be difficult. Because of feedback loops of different signs, heterogeneities and non-linearities, the macro-properties are often hard to anticipate. In particular, these situations generically lead to a very large number of possible equilibria, or even the lack thereof. Spin-glasses and other disordered systems give a concrete example of such difficulties. In order to tackle these complex situations, new theoretical and numerical tools have been invented in the last 50 years, including of course the replica method and replica symmetry breaking, and the cavity method, both static and dynamic. In this chapter we review the application of such ideas and methods in economics and social sciences. Of particular interest are the proliferation (and fragility) of equilibria, the analogue of satisfiability phase transitions in games and random economies, and condensation (or concentration) effects in opinion, wealth, etcComment: Contribution to the edited volume "Spin Glass Theory & Far Beyond - Replica Symmetry Breaking after 40 Years", World Scientific, 202

Security Economics in the European Context: Implications of the EUSECON Project

This paper presents key aspects and policy implications of a multi-annual research project on economic analyses of European security issues (EUSECON), with an emphasis on intentional threats of organised crime, piracy and terrorism. The first part argues that rational models can provide significant insights on the emergence and current patterns of terrorism and piracy. These findings could lead to new priorities or to more nuanced interventions in response to these threats. The second part focuses on the direct and indirect costs of both terrorism and organised crime. EUSECON provided new data about the scope of related illegal economic activities and explored the sensitivity of markets, societies and polities in the aftermath of terrorist attacks. It emerges that political actors are at greatest risk of over-responding, whereas mature economies display a high degree of resilience. Finally, the third part discusses economic approaches to policy evaluation. EUSECON clarified the benefits of transnational security cooperation, but also highlights the difficulties of rigorous costeffectiveness and cost-benefit calculations. Therefore, a more evidence-based approach to security policymaking, which is increasingly touted by EU decision-makers, remains elusive. In conclusion, European security policy needs further scrutiny from an economic perspective, in order to answer the increasing complexity of security challenges under the increasing financial or political constraints.

Artificial intelligence in educational leadership: a symbiotic role of human-artificial intelligence decision-making

Purpose. Artificial intelligence (AI) refers to a type of algorithms or computerized systems that resemble human mental processes of decision-making. This position paper looks beyond the sensational hyperbole of AI in teaching and learning. Instead, this paper aims to explore the role of AI in educational leadership. Design/methodology/approach. To explore the role of AI in educational leadership, I synthesized the literature that intersects AI, decision-making, and educational leadership from multiple disciplines such as computer science, educational leadership, administrative science, judgment and decision-making and neuroscience. Grounded in the intellectual interrelationships between AI and educational leadership since the 1950s, this paper starts with conceptualizing decision-making, including both individual decision-making and organizational decision-making, as the foundation of educational leadership. Next, I elaborated on the symbiotic role of human-AI decision-making. Findings. With its efficiency in collecting, processing, analyzing data and providing real-time or near real-time results, AI can bring in analytical efficiency to assist educational leaders in making data-driven, evidence-informed decisions. However, AI-assisted data-driven decision-making may run against value-based moral decision-making. Taken together, both leaders\u27 individual decision-making and organizational decision-making are best handled by using a blend of data-driven, evidence-informed decision-making and value-based moral decision-making. AI can function as an extended brain in making data-driven, evidence-informed decisions. The shortcomings of AI-assisted data-driven decision-making can be overcome by human judgment guided by moral values. Practical implications The paper concludes with two recommendations for educational leadership practitioners\u27 decision-making and future scholarly inquiry: keeping a watchful eye on biases and minding ethically-compromised decisions. Originality/value. This paper brings together two fields of educational leadership and AI that have been growing up together since the 1950s and mostly growing apart till the late 2010s. To explore the role of AI in educational leadership, this paper starts with the foundation of leadership—decision-making, both leaders\u27 individual decisions and collective organizational decisions. The paper then synthesizes the literature that intersects AI, decision-making and educational leadership from multiple disciplines to delineate the role of AI in educational leadership