Coherence Shifts in Probabilistic Inference Tasks

The fast-and-frugal heuristics approach to probabilistic inference assumes that individuals often employ simple heuristics to integrate cue information that commonly function in a non-reciprocal fashion. Specifically, the subjective validity of a certain cue remains stable during the application of a heuristic and is not changed by the presence or absence of another cue. The parallel-constraint-satisfaction model, in contrast, predicts that information is processed in a reciprocal fashion. Specifically, it assumes that subjective cue validities interactively af-fect each other and are modified to coherently support the favored choice. Corresponding to the model’s simulation, we predicted the direction of such coherence shifts.Cue validities were measured before, after (Exp. 1) and during judgment (Exp. 2 & 3). Coherence shifts were found in environments involving real-world cue knowledge (weather forecasts) and in a domain for which the application of fast-and-frugal heuristics has been demonstrated (city-size tasks). The results indicate that subjective cue validities are not fixed parameters, but that they are interactively changed to form coherent representations of the task.Judgment, Connectionism, Parallel Constraint Satisfaction, Fast-and-Frugal Heuristics, Adaptive Decision Making, Bounded Rationality

International diversification benefits with foreign exchange investment styles

This paper provides a comprehensive analysis of portfolio choice with popular foreign exchange (FX) investment styles such as carry trades and strategies commonly known as FX momentum, and FX value. We investigate if diversification benefits can be achieved by style investing in FX markets relative to a benchmark allocation consisting of U.S. bonds, U.S. stocks, and international stocks. Overall, our results suggest that there are significant improvements in international portfolio diversification due to style-based investing in FX markets (both in the statistical, and most importantly, in the economic sense). These results prevail for the most important investment styles after accounting for transaction costs due to re-balancing of currency positions, and also hold in out-of-sample tests. Moreover, these gains do not only apply to a mean-variance investor but we also show that international portfolios augmented by FX investment styles are superior in terms of second and third order stochastic dominance. Thus, even an investor who dislikes negatively skewed return distributions would prefer a portfolio augmented by FX investment styles compared to the benchmark. --International Diversification,Foreign Exchange Speculation and Hedging,Carry Trades,Stochastic Dominance,Investment Styles

Coding of Melodic Gestalt in Human Auditory Cortex

The perception of a melody is invariant to the absolute properties of its constituting notes, but depends on the relation between them—the melody's relative pitch profile. In fact, a melody's "Gestalt” is recognized regardless of the instrument or key used to play it. Pitch processing in general is assumed to occur at the level of the auditory cortex. However, it is unknown whether early auditory regions are able to encode pitch sequences integrated over time (i.e., melodies) and whether the resulting representations are invariant to specific keys. Here, we presented participants different melodies composed of the same 4 harmonic pitches during functional magnetic resonance imaging recordings. Additionally, we played the same melodies transposed in different keys and on different instruments. We found that melodies were invariantly represented by their blood oxygen level-dependent activation patterns in primary and secondary auditory cortices across instruments, and also across keys. Our findings extend common hierarchical models of auditory processing by showing that melodies are encoded independent of absolute pitch and based on their relative pitch profile as early as the primary auditory corte

Attracting Profit Shifting or Fostering Innovation? On Patent Boxes and R&D Subsidies

Many countries have introduced patent box regimes in recent years, offering a reduced tax rate to businesses for their IP-related income. In this paper, we analyze the effects of patent box regimes when countries can simultaneously use patent boxes and R&D subsidies to promote innovation. We show that when countries set their tax policies non-cooperatively, innovation is fostered, at the margin, only by the R&D subsidy, whereas the patent box tax rate is targeted at attracting international profit shifting. In equilibrium, patent box regimes emerge endogenously under policy competition, but never under policy coordination. We also compare the competition for mobile patents with the competition for mobile R&D units and show that enforcing a nexus principle is likely to reduce the aggressiveness of patent box regimes

Continuity bounds on observational entropy and measured relative entropies

We derive a measurement-independent asymptotic continuity bound on the observational entropy for general POVM measurements, making essential use of its property of bounded concavity. The same insight is used to obtain continuity bounds for other entropic quantities, including the measured relative entropy distance to a convex a set of states under a general set of measurements. As a special case, we define and study conditional observational entropy, which is an observational entropy in one (measured) subsystem conditioned on the quantum state in another (unmeasured) subsystem. We also study continuity of relative entropy with respect to a jointly applied channel, finding that observational entropy is uniformly continuous as a function of the measurement. But we show by means of an example that this continuity under measurements cannot have the form of a concrete asymptotic bound.Comment: 16 pages; v2 new Corollary 15 on measurement continuit

Tunable X-ray source by Thomson scattering during laser-wakefield acceleration

We report results on all-optical Thomson scattering intercepting the acceleration process in a laser wakefield accelerator. We show that the pulse collision position can be detected using transverse shadowgraphy which also facilitates alignment. As the electron beam energy is evolving inside the accelerator, the emitted spectrum changes with the scattering position. Such a configuration could be employed as accelerator diagnostic as well as reliable setup to generate x-rays with tunable energy

International diversification benefits with foreign exchange investment styles

This paper provides a comprehensive analysis of portfolio choice with popular foreign exchange (FX) investment styles such as carry trades and strategies commonly known as FX momentum, and FX value. We investigate if diversification benefits can be achieved by style investing in FX markets relative to a benchmark allocation consisting of U.S. bonds, U.S. stocks, and international stocks. Overall, our results suggest that there are significant improvements in international portfolio diversification due to style-based investing in FX markets (both in the statistical, and most importantly, in the economic sense). These results prevail for the most important investment styles after accounting for transaction costs due to re-balancing of currency positions, and also hold in out-of-sample tests. Moreover, these gains do not only apply to a mean-variance investor but we also show that international portfolios augmented by FX investment styles are superior in terms of second and third order stochastic dominance. Thus, even an investor who dislikes negatively skewed return distributions would prefer a portfolio augmented by FX investment styles compared to the benchmark