Response to worrying trends in econophysics

This article is a response to the recent “Worrying Trends in Econophysics” critique written by four respected theoretical economists [1]. Two of the four have written books and papers that provide very useful critical analyses of the shortcomings of the standard textbook economic model, neo-classical economic theory [2,3] and have even endorsed my book [4]. Largely, their new paper reflects criticism that I have long made [4,5,6,7,] and that our group as a whole has more recently made [8]. But I differ with the authors on some of their criticism, and partly with their proposed remedy.General equilibrium; uncertainty; conservation laws; money nonconservation; nonintegrability of dynamical systems; financial markets; stochastic processes

Response to Worrying Trends in Econophysics

This article is a response to the recent Worrying Trends in Econophysics critique written by four respected theoretical economists. Two of the four have written books and papers that provide very useful critical analyses of the shortcomings of the standard textbook economic model, neo-classical economic theory and have even endorsed my book. Largely, their new paper reflects criticism that I have long made and that our group as a whole has more recently made. But I differ with the authors on some of their criticism, and partly with their proposed remedy

Control Structures and Payout Policy

This paper examines the payout policies of UK firms listed on the London Stock Exchange during the 1990s.It complements the existing literature by analyzing the trends in both dividends and total payouts (including share repurchases).In a dynamic panel data regression setting, we relate target payout ratios to control structure variables.Profitability drives payout decisions of the UK companies, but the presence of strong block holders or block holder coalitions considerably weakens the relationship between corporate earnings and payout dynamics.While the impact of the voting power of shareholders coalitions on payout ratios is found to be always negative, the magnitude of this effect differs across different categories of block holders (i.e. industrial firms, outside individuals, directors, financial institutions).The controlling shareholders appear to trade off the agency problems of free cash flow against the risk of underinvestment, and try to enforce payout policies that optimally balance these two costs.Finally, the paper improves upon some methodological flaws of the recent empirical studies of payout policy.Payout policy;dividend payout;share repurchases;partial adjustment;ownership and control;voting power;Banzhaf power indices;corporate governance;free cash flow;pecking order

Customer Lifetime Value in Video Games Using Deep Learning and Parametric Models

Nowadays, video game developers record every virtual action performed by their players. As each player can remain in the game for years, this results in an exceptionally rich dataset that can be used to understand and predict player behavior. In particular, this information may serve to identify the most valuable players and foresee the amount of money they will spend in in-app purchases during their lifetime. This is crucial in free-to-play games, where up to 50% of the revenue is generated by just around 2% of the players, the so-called whales. To address this challenge, we explore how deep neural networks can be used to predict customer lifetime value in video games, and compare their performance to parametric models such as Pareto/NBD. Our results suggest that convolutional neural network structures are the most efficient in predicting the economic value of individual players. They not only perform better in terms of accuracy, but also scale to big data and significantly reduce computational time, as they can work directly with raw sequential data and thus do not require any feature engineering process. This becomes important when datasets are very large, as is often the case with video game logs. Moreover, convolutional neural networks are particularly well suited to identify potential whales. Such an early identification is of paramount importance for business purposes, as it would allow developers to implement in-game actions aimed at retaining big spenders and maximizing their lifetime, which would ultimately translate into increased revenue

Acquisiton Strategies: Empirical Evidence of Outsider-Toeholds

Theoretically, cross ownership may mitigate mergers, i.e. market concentrations. Holding a share in a competing firm before the acquisition of another firm, outsider-toehold, is more profitable in some market constellations, due to the positive externality on the outsider (competing) firm when a merger occurs. The purposes of this paper are to empirically observe when US firms buy outsider-toeholds and through event-studies estimate the gains of buyers, outsider firms and competitors when firms holding outsider-toeholds merge.Acquisition; Antitrust; Insiders’ Dilemma; Mergers; Toeholds