The Financing of Innovation: Learning and Stopping

This paper considers the financing of a research project under uncertainty about the time of completion and the probability of eventual success.The uncertainty about future success gradually diminishes with the arrival of additional funding.The entrepreneur controls the funds and can divert them.We distinguish between relationship financing, meaning that the entrepreneur's allocation of the funds is observable, and arm's length financing, where it is unobservable.We find that equilibrium funding stops altogether too early relative to the efficient stopping time in both financing modes.We characterize the optimal contracts and equilibrium funding decisions.The financial constraints will typically become tighter over time under relationship finance, and looser under arm's length financing.The trade-off is that while relationship financing may require smaller information rents, arm's length financing amounts to an implicit commitment to a finite funding horizon.The lack of such a commitment under relationship financing implies that the sustainable release of funds eventually slows down.We obtain the surprising result that arm's length contracts are preferable in a Pareto sense.innovation;finance;venture capital;learning

Venture Capital Financing, Moral Hazard and Learning

We consider the provision of venture capital in a dynamic agency model. The value of the venture project is initially uncertain and more information arrives by developing the project. The allocation of the funds and the learning process are subject to moral hazard. The optimal contract is a time-varying share contract which provides intertemporal risk-sharing between venture capitalist and entrepreneur. The share of the entrepreneur reflects the value of a real option. The option itself is based on the control of the funds. The dynamic agency costs may be high and lead to an ine¢cient early stopping of the project. A positive liquidation value explains the adoption of strip financing or convertible securities. Finally, relationship financing, including monitoring and the occasional replacement of the management improves the efficiency of the financial contracting.venture financing;optimal stopping;dynamic financial constraints;share contracts;security design

Interpretation of the angular dependence of the de Haas-van Alphen effect in MgB_2

We present detailed results for the amplitude and field dependence of the de Haas-van Alphen (dHvA) signal arising from the electron-like $\pi$ sheet of Fermi surface in MgB_2. Our data and analysis show that the dip in dHvA amplitude when the field is close to the basal plane is caused by a beat between two very similar dHvA frequencies and not a spin-zero effect as previously assumed. Our results imply that the Stoner enhancement factors in MgB_2 are small on both the Sigma and Pi sheets.Comment: 4 pages with figures. Submitted to PR

Optimal Design of Robust Combinatorial Mechanisms for Substitutable Goods

In this paper we consider multidimensional mechanism design problem for selling discrete substitutable items to a group of buyers. Previous work on this problem mostly focus on stochastic description of valuations used by the seller. However, in certain applications, no prior information regarding buyers' preferences is known. To address this issue, we consider uncertain valuations and formulate the problem in a robust optimization framework: the objective is to minimize the maximum regret. For a special case of revenue-maximizing pricing problem we present a solution method based on mixed-integer linear programming formulation

Angle-dependence of quantum oscillations in YBa2Cu3O6.59 shows free spin behaviour of quasiparticles

Measurements of quantum oscillations in the cuprate superconductors afford a new opportunity to assess the extent to which the electronic properties of these materials yield to a description rooted in Fermi liquid theory. However, such an analysis is hampered by the small number of oscillatory periods observed. Here we employ a genetic algorithm to globally model the field, angular, and temperature dependence of the quantum oscillations observed in the resistivity of YBa2Cu3O6.59. This approach successfully fits an entire data set to a Fermi surface comprised of two small, quasi-2-dimensional cylinders. A key feature of the data is the first identification of the effect of Zeeman splitting, which separates spin-up and spin-down contributions, indicating that the quasiparticles in the cuprates behave as nearly free spins, constraining the source of the Fermi surface reconstruction to something other than a conventional spin density wave with moments parallel to the CuO2 planes.Comment: 8 pages, 4 figure

Nearly free electrons in the layered oxide superconductor Ag5Pb2O6

We present first measurements of quantum oscillations in the layered oxide superconductor Ag5Pb2O6. From a detailed angular and temperature dependent study of the dHvA effect we determine the electronic structure and demonstrate that the electron masses are very light, m^* is approximately equalt to 1.2 m_e. The Fermi surface we observe is essentially that expected of nearly-free electrons - establishing Ag5Pb2O6 as the first known example of a monovalent, nearly-free electron superconductor at ambient pressure.Comment: 4 pages, 3 figure

Analysis of stellar spectra with 3D and NLTE models

Models of radiation transport in stellar atmospheres are the hinge of modern astrophysics. Our knowledge of stars, stellar populations, and galaxies is only as good as the theoretical models, which are used for the interpretation of their observed spectra, photometric magnitudes, and spectral energy distributions. I describe recent advances in the field of stellar atmosphere modelling for late-type stars. Various aspects of radiation transport with 1D hydrostatic, LTE, NLTE, and 3D radiative-hydrodynamical models are briefly reviewed.Comment: 21 pages, accepted for publication as a chapter in "Determination of Atmospheric Parameters of B, A, F and G Type Stars", Springer (2014), eds. E. Niemczura, B. Smalley, W. Pyc

Fermi Surface Reconstruction in CeRh1−x_{1-x}Cox_{x}In5_{5}

The evolution of the Fermi surface of CeRh$_{1-x}$Co$_x$In$_5$ was studied as a function of Co concentration $x$ via measurements of the de Haas-van Alphen effect. By measuring the angular dependence of quantum oscillation frequencies, we identify a Fermi surface sheet with $f$-electron character which undergoes an abrupt change in topology as $x$ is varied. Surprisingly, this reconstruction does not occur at the quantum critical concentration $x_c$, where antiferromagnetism is suppressed to T=0. Instead we establish that this sudden change occurs well below $x_c$, at the concentration x ~ 0.4 where long range magnetic order alters its character and superconductivity appears. Across all concentrations, the cyclotron effective mass of this sheet does not diverge, suggesting that critical behavior is not exhibited equally on all parts of the Fermi surface.Comment: 4 pages, 4 figure

Damping of the de Haas-van Alphen oscillations in the superconducting state of MgB_2

The de Haas-van Alphen (dHvA) signal arising from orbits on the $\pi$ Fermi surface sheet of the two-gap superconductor MgB$_2$ has been observed in the vortex state below $H_{c2}$. An extra attenuation of the dHvA signal, beyond those effects described in the conventional Lifshitz-Kosevich expression, is seen due to the opening of the superconducting gap. Our data show that the $\pi$ band gap is still present up to $H_{c2}$. The data are compared to current theories of dHvA oscillations in the superconducting state which allow us to extract estimates for the evolution of the $\pi$ band gap with magnetic field. Contrary to results for other materials, we find that the most recent theories dramatically underestimate the damping in MgB$_2$.Comment: 10 pages with figures. Submitted to Phys. Rev. B. PDF version with higher quality figures can be found at http://www.phy.bris.ac.uk/research/cond_matt/PdfPubs/mgb2RSdhva.pd

Fermi Surface, Surface States, and Surface Reconstruction in Sr2RuO4

The electronic structure of Sr2RuO4 is investigated by high angular resolution ARPES at several incident photon energies. We address the controversial issues of the Fermi surface (FS) topology and of the van Hove singularity at the M point, showing that a surface state and the replica of the primary FS due to (sqrt2 x sqrt2) surface reconstruction are responsible for previous conflicting interpretations. The FS thus determined by ARPES is consistent with the de Haas-van Alphen results, and it provides additional information on the detailed shape of the alpha, beta and gamma sheets.Comment: Final version for Physical Review Letters. Revtex, 4 pages, 4 postscript pictures embedded in the tex