A contagious living fluid: objectification and assemblage in the history of virology

This article deals with the birth of `the virus' as an object of technoscientific analysis. The aim is to discuss the process of objectification of pathogen virulence in virological and medical discourses. Through a short excursion into the history of modern virology, it will be argued that far from being a matter of fact, pathogen virulence had to be `produced', for example in petri-dishes, test-kits and hyper-real signification-practices. The now commonly accepted objective status of `the virus' has been an accomplishment of a complex ensemble of actors. Indeed, this illustrates why objectification rather than objectivity has become the main focus of science and technology studies. The objectification of `the' virus was by no means a smooth process. It involved more than five decades of highly speculative and fragmented research projects before it became actualized as a separate discipline under the heading of virology. The specific objectification of viruses took place through an inter-disciplinary de-differentiation of research questions, methodologies, techniques and technologies. The main argument of this article is that viruses only became intelligible after the establishment of a virology-assemblage. Its inauguration in the early 1950s was radical and sudden because only then could the various substrands of virological technoscience affect each other through deliberate enrolment, and engender a universal intelligibility

The Formation of Financial Networks

Modern banking systems are highly interconnected. Despite their various benefits, the linkages that exist between banks carry the risk of contagion. In this paper we investigate how banks decide on direct balance sheet linkages and the implications for contagion risk. In particular, we model a network formation process in the banking system. Banks form links order to reduce the risk of contagion. The network is formed endogenously and serves as an insurance mechanism. We show that banks manage to form networks that are resilient to contagion. Thus, in an equilibrium network, the probability of contagion is virtually 0.Financial Stability, Network Formation, Contagion Risk

Strategic Investment in Protection in Networked Systems

We study the incentives that agents have to invest in costly protection against cascading failures in networked systems. Applications include vaccination, computer security and airport security. Agents are connected through a network and can fail either intrinsically or as a result of the failure of a subset of their neighbors. We characterize the equilibrium based on an agent's failure probability and derive conditions under which equilibrium strategies are monotone in degree (i.e. in how connected an agent is on the network). We show that different kinds of applications (e.g. vaccination, malware, airport/EU security) lead to very different equilibrium patterns of investments in protection, with important welfare and risk implications. Our equilibrium concept is flexible enough to allow for comparative statics in terms of network properties and we show that it is also robust to the introduction of global externalities (e.g. price feedback, congestion).Comment: 32 pages, 3 figure

An economic model of contagion in interbank lending markets

This paper considers the stability of a financial system in which heterogenous banks interact through a lending market. We analyse a discrete time model in which households and banks are located on a circular city. Households present banks with risky investment opportunities, which banks fund through deposits and interbank borrowing. In the event of bankruptcy, a bank defaults on its interbank loans potentially resulting in contagion and losses for other banks. Through simulation we examine the vulnerability of the financial system to systemic events, demonstrating the non-linear relationship between market concentration, shock severity and bankruptcies. The role and effect of regulatory actions such as reserve requirements, minimum bank capitalisation and constraints on the size of borrowing relationships, are considered in limiting these effects.Systemic risk; Interbank lending; Regulation; Network; Heterogeneity

Bank Capital, Liquidity and Systemic Risk

We analyze the impact of capital adequacy regulation on bank insolvency and aggregate investment. We develop a model of the banking system that is characterized by the interaction of many heterogeneous banks with the real sector, interbank credit relations as a consequence of bank liquidity management and an insolvency mechanism. This allows us to study the impact of capital adequacy regulation on systemic risk. In particular we can analyze the impact of regulation on contagious defaults arising from mutual credit relations. We show that the impact of capital adequacy on systemic stability is ambiguous and that systemic risk might actually increase as a consequence of imposing capital constraints on banks. Furthermore we analyze the indirect consequences of capital adequacy regulation that are transmitted to the real economy by their impact on equilibrium interbank rates and thus the opportunity costs of liquidity within the banking system.

Optimizing surveillance for livestock disease spreading through animal movements

The spatial propagation of many livestock infectious diseases critically depends on the animal movements among premises; so the knowledge of movement data may help us to detect, manage and control an outbreak. The identification of robust spreading features of the system is however hampered by the temporal dimension characterizing population interactions through movements. Traditional centrality measures do not provide relevant information as results strongly fluctuate in time and outbreak properties heavily depend on geotemporal initial conditions. By focusing on the case study of cattle displacements in Italy, we aim at characterizing livestock epidemics in terms of robust features useful for planning and control, to deal with temporal fluctuations, sensitivity to initial conditions and missing information during an outbreak. Through spatial disease simulations, we detect spreading paths that are stable across different initial conditions, allowing the clustering of the seeds and reducing the epidemic variability. Paths also allow us to identify premises, called sentinels, having a large probability of being infected and providing critical information on the outbreak origin, as encoded in the clusters. This novel procedure provides a general framework that can be applied to specific diseases, for aiding risk assessment analysis and informing the design of optimal surveillance systems.Comment: Supplementary Information at https://sites.google.com/site/paolobajardi/Home/archive/optimizing_surveillance_ESM_l.pdf?attredirects=

Systemic risk: A survey

This paper develops a broad concept of systemic risk, the basic economic concept for the understanding of financial crises. It is claimed that any such concept must integrate systemic events in banking and financial markets as well as in the related payment and settlement systems. At the heart of systemic risk are contagion effects, various forms of external effects. The concept also includes simultaneous financial instabilities following aggregate shocks. The quantitative literature on systemic risk, which was evolving swiftly in the last couple of years, is surveyed in the light of this concept. Various rigorous models of bank and payment system contagion have now been developed, although a general theoretical paradigm is still missing. Direct econometric tests of bank contagion effects seem to be mainly limited to the United States. Empirical studies of systemic risk in foreign exchange and security settlement systems appear to be non-existent. Moreover, the literature surveyed reflects the general difficulty to develop empirical tests that can make a clear distinction between contagion in the proper sense and joint crises caused by common shocks, rational revisions of depositor or investor expectations when information is asymmetric ('information-based' contagion) and 'pure' contagion as well as between 'efficient' and 'inefficient' systemic events. JEL Classification: G21, G29, G12, E49banking crises, Contagion, currency crises, financial markets, financial stability, payment and settlement systems, systemic risk

Individual Security and Network Design with Malicious Nodes

Networks are beneficial to those being connected but can also be used as carriers of contagious hostile attacks. These attacks are often facilitated by exploiting corrupt network users. To protect against the attacks, users can resort to costly defense. The decentralized nature of such protection is known to be inefficient but the inefficiencies can be mitigated by a careful network design. Is network design still effective when not all users can be trusted? We propose a model of network design and defense with byzantine nodes to address this question. We study the optimal defended networks in the case of centralized defense and, for the case of decentralized defense, we show that the inefficiencies due to decentralization can be fully mitigated, despite the presence of the byzantine nodes.Comment: 19 pages, 3 figure