Risk Taking with Additive and Multiplicative Background Risks

We examine the effects of background risks on optimal portfolio choice. Examples of background risks include uncertain labor income, uncertainty about the terminal value of fixed assets such as housing and uncertainty about future tax liabilities. While some of these risks are additive and have been amply studied, others are multiplicative in nature and have received far less attention. The simultaneous effect of both additive and multiplicative risks has hitherto not received attention and can explain some paradoxical choice behavior. We rationalize such behavior and show how background risks might lead to seemingly U-shaped relative risk aversion for a representative investor.Derived risk aversion, Additive, multiplicative background risk

Multiplicative background risk

We consider random wealth of the multiplicative form xy, where x and y are statistically independent random variables. We assume that x is endogenous to the economic agent, but that y is an exogenous and uninsurable background risk. Our main focus is on how the randomness of y affects risk-taking behavior for decisions on the choice of x. We characterize conditions on preferences that lead to more cautious behavior. We also develop the concept of the affiliated utility function, which we define as the composition of the underlying utility function and the exponential function. This allows us to adapt several results for additive background risk to the multiplicative case. -- Wir betrachten den zufälligen Reichtum der multiplikativen Form xy, wo x und y statistisch unabhängige Zufallsvariablen sind. Wir nehmen an, daß x endogen für den ökonomischen Agenten ist, aber daß y ein exogenes und nicht versicherbares Hintergrundrisiko ist. Unser Hauptaugenmerk liegt darauf, wie die Zufälligkeit von y das Risikoverhalten bei Entscheidungen für x beeinflußt. Wir charakterisieren die Bedingungen der Präferenzen, die zu einem vorsichtigeren Verhalten führen. Wir entwickeln auch ein Konzept der „affiliated“ Nutzenfunktion, die eine Zusammensetzung der ursprünglichen Nutzenfunktion und der Exponentialfunktion ist. Dies erlaubt es uns, mehrere Ergebnisse für additive Hintergrundrisiken auf den multiplikativen Fall anzupassen.background risk,standard risk aversion,affiliated utility function

Multiplicative Background Risk

Although there has been much attention in recent years on the effects of additive background risks, the same is not true for its multiplicative counterpart. We consider random wealth of the multiplicative form xy, where x and y are statistically independent random variables. We assume that x is endogenous to the economic agent, but that y is an exogenous and nontradable background risk, which represents a type of market incompleteness. Our main focus is on how the presence of the multiplicative background risk y affects risk-taking behavior for decisions on the choice of x. We characterize conditions on preferences that lead to more cautious behavior.multiplicative risks, background risk, incomplete markets, standard risk aversion, affiliated utility function, multiplicative risk vulnerability

Copyright and cultural work: an exploration

This article first discusses the contemporary debate on cultural “creativity” and the economy. Second, it considers the current state of UK copyright law and how it relates to cultural work. Third, based on empirical research on British dancers and musicians, an analysis of precarious cultural work is presented. A major focus is how those who follow their art by way of “portfolio” work handle their rights in ways that diverge significantly from the current simplistic assumptions of law and cultural policy. Our conclusions underline the distance between present top-down conceptions of what drives production in the cultural field and the actual practice of dancers and musicians

Metastable Vortex Lattice Phases in Superconducting MgB2

The vortex lattice (VL) symmetry and orientation in clean type-II superconductors depends sensitively on the host material anisotropy, vortex density and temperature, frequently leading to rich phase diagrams. Typically, a well-ordered VL is taken to imply a ground state configuration for the vortex-vortex interaction. Using neutron scattering we studied the VL in MgB2 for a number of field-temperature histories, discovering an unprecedented degree of metastability in connection with a known, second-order rotation transition. This allows, for the first time, structural studies of a well-ordered, non-equilibrium VL. While the mechanism responsible for the longevity of the metastable states is not resolved, we speculate it is due to a jamming of VL domains, preventing a rotation to the ground state orientation.Comment: Main paper: 5 pages, 4 figures. Supplementary material: 3 pages, 7 figure

Quantum-classical transition and quantum activation of ratchet currents in the parameter space

The quantum ratchet current is studied in the parameter space of the dissipative kicked rotor model coupled to a zero temperature quantum environment. We show that vacuum fluctuations blur the generic isoperiodic stable structures found in the classical case. Such structures tend to survive when a measure of statistical dependence between the quantum and classical currents are displayed in the parameter space. In addition, we show that quantum fluctuations can be used to overcome transport barriers in the phase space. Related quantum ratchet current activation regions are spotted in the parameter space. Results are discussed {based on quantum, semiclassical and classical calculations. While the semiclassical dynamics involves vacuum fluctuations, the classical map is driven by thermal noise.Comment: 6 pages, 3 figure

Hypervelocity Star Candidates in the SEGUE G & K Dwarf Sample

We present 20 candidate hypervelocity stars from the Sloan Extension for Galactic Understanding and Exploration (SEGUE) G and K dwarf samples. Previous searches for hypervelocity stars have only focused on large radial velocities; in this study we also use proper motions to select the candidates. We determine the hypervelocity likelihood of each candidate by means of Monte Carlo simulations, considering the significant errors often associated with high proper motion stars. We find that nearly half of the candidates exceed their escape velocities with at least 98% probability. Every candidate also has less than a 25% chance of being a high-velocity fluke within the SEGUE sample. Based on orbits calculated using the observed six-dimensional positions and velocities, few, if any, of these candidates originate from the Galactic center. If these candidates are truly hypervelocity stars, they were not ejected by interactions with the Milky Way's supermassive black hole. This calls for a more serious examination of alternative hypervelocity-star ejection scenarios.Comment: 8 pages, 5 figures, published in ApJ, this version includes all figures as intende

Non-Fermi liquid behavior of SrRuO_3 -- evidence from infrared conductivity

The reflectivity of the itinerant ferromagnet SrRuO_3 has been measured between 50 and 25,000 cm-1 at temperatures ranging from 40 to 300 K, and used to obtain conductivity, scattering rate, and effective mass as a function of frequency and temperature. We find that at low temperatures the conductivity falls unusually slowly as a function of frequency (proportional to \omega^{-1/2}), and at high temperatures it even appears to increase as a function of frequency in the far-infrared limit. The data suggest that the charge dynamics of SrRuO_3 are substantially different from those of Fermi-liquid metals.Comment: 4 pages, 3 postscript figure

Programming Protocol-Independent Packet Processors

P4 is a high-level language for programming protocol-independent packet processors. P4 works in conjunction with SDN control protocols like OpenFlow. In its current form, OpenFlow explicitly specifies protocol headers on which it operates. This set has grown from 12 to 41 fields in a few years, increasing the complexity of the specification while still not providing the flexibility to add new headers. In this paper we propose P4 as a strawman proposal for how OpenFlow should evolve in the future. We have three goals: (1) Reconfigurability in the field: Programmers should be able to change the way switches process packets once they are deployed. (2) Protocol independence: Switches should not be tied to any specific network protocols. (3) Target independence: Programmers should be able to describe packet-processing functionality independently of the specifics of the underlying hardware. As an example, we describe how to use P4 to configure a switch to add a new hierarchical label