Systemic risk in a unifying framework for cascading processes on networks

We introduce a general framework for models of cascade and contagion processes on networks, to identify their commonalities and differences. In particular, models of social and financial cascades, as well as the fiber bundle model, the voter model, and models of epidemic spreading are recovered as special cases. To unify their description, we define the net fragility of a node, which is the difference between its fragility and the threshold that determines its failure. Nodes fail if their net fragility grows above zero and their failure increases the fragility of neighbouring nodes, thus possibly triggering a cascade. In this framework, we identify three classes depending on the way the fragility of a node is increased by the failure of a neighbour. At the microscopic level, we illustrate with specific examples how the failure spreading pattern varies with the node triggering the cascade, depending on its position in the network and its degree. At the macroscopic level, systemic risk is measured as the final fraction of failed nodes, X*, and for each of the three classes we derive a recursive equation to compute its value. The phase diagram of X* as a function of the initial conditions, thus allows for a prediction of the systemic risk as well as a comparison of the three different model classes. We could identify which model class leads to a first-order phase transition in systemic risk, i.e. situations where small changes in the initial conditions determine a global failure. Eventually, we generalize our framework to encompass stochastic contagion models. This indicates the potential for further generalization

The Network of Global Corporate Control

The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic \u201csuper-entity\u201d that raises new important issues both for researchers and policy makers

Gravitational Waves from Rotating Proto-Neutron Stars

We study the effects of rotation on the quasi normal modes (QNMs) of a newly born proto neutron star (PNS) at different evolutionary stages, until it becomes a cold neutron star (NS). We use the Cowling approximation, neglecting spacetime perturbations, and consider different models of evolving PNS. The frequencies of the modes of a PNS are considerably lower than those of a cold NS, and are further lowered by rotation; consequently, if QNMs were excited in a sufficiently energetic process, they would radiate waves that could be more easily detectable by resonant-mass and interferometric detectors than those emitted by a cold NS. We find that for high rotation rates, some of the g-modes become unstable via the CFS instability; however, this instability is likely to be suppressed by competing mechanisms before emitting a significant amount of gravitational waves.Comment: 5 pages, proceedings of the 5th Edoardo Amaldi Conference On Gravitational Wave

Credit Default Swaps Drawup Networks: Too Tied To Be Stable?

We analyse time series of CDS spreads for a set of major US and European institutions on a pe- riod overlapping the recent financial crisis. We extend the existing methodology of {\epsilon}-drawdowns to the one of joint {\epsilon}-drawups, in order to estimate the conditional probabilities of abrupt co-movements among spreads. We correct for randomness and for finite size effects and we find significant prob- ability of joint drawups for certain pairs of CDS. We also find significant probability of trend rein- forcement, i.e. drawups in a given CDS followed by drawups in the same CDS. Finally, we take the matrix of probability of joint drawups as an estimate of the network of financial dependencies among institutions. We then carry out a network analysis that provides insights into the role of systemically important financial institutions.Comment: 15 pages, 5 figures, Supplementary informatio

Backbone of complex networks of corporations: The flow of control

We present a methodology to extract the backbone of complex networks based on the weight and direction of links, as well as on nontopological properties of nodes. We show how the methodology can be applied in general to networks in which mass or energy is flowing along the links. In particular, the procedure enables us to address important questions in economics, namely, how control and wealth are structured and concentrated across national markets. We report on the first cross-country investigation of ownership networks, focusing on the stock markets of 48 countries around the world. On the one hand, our analysis confirms results expected on the basis of the literature on corporate control, namely, that in Anglo-Saxon countries control tends to be dispersed among numerous shareholders. On the other hand, it also reveals that in the same countries, control is found to be highly concentrated at the global level, namely, lying in the hands of very few important shareholders. Interestingly, the exact opposite is observed for European countries. These results have previously not been reported as they are not observable without the kind of network analysis developed here.Comment: 24 pages, 12 figures, 2nd version (text made more concise and readable, results unchanged

The price of complexity in financial networks

Financial institutions form multilayer networks by engaging in contracts with each other and by holding exposures to common assets. As a result, the default probability of one institution depends on the default probability of all of the other institutions in the network. Here, we show how small errors on the knowledge of the network of contracts can lead to large errors in the probability of systemic defaults. From the point of view of financial regulators, our findings show that the complexity of financial networks may decrease the ability to mitigate systemic risk, and thus it may increase the social cost of financial crises

Topological enslavement in evolutionary games on correlated multiplex networks

Governments and enterprises strongly rely on incentives to generate favorable outcomes from social and strategic interactions between individuals. The incentives are usually modeled by payoffs in evolutionary games, such as the prisoner's dilemma or the harmony game, with imitation dynamics. Adjusting the incentives by changing the payoff parameters can favor cooperation, as found in the harmony game, over defection, which prevails in the prisoner's dilemma. Here, we show that this is not always the case if individuals engage in strategic interactions in multiple domains. In particular, we investigate evolutionary games on multiplex networks where individuals obtain an aggregate payoff. We explicitly control the strength of degree correlations between nodes in the different layers of the multiplex. We find that if the multiplex is composed of many layers and degree correlations are strong, the topology of the system enslaves the dynamics and the final outcome, cooperation or defection, becomes independent of the payoff parameters. The fate of the system is then determined by the initial conditions

Silicon photomultiplier arrays - a novel photon detector for a high resolution tracker produced at FBK-irst, Italy

A silicon photomultiplier (SiPM) array has been developed at FBK-irst having 32 channels and a dimension of 8.0 x 1.1 mm^2. Each 250 um wide channel is subdivided into 5 x 22 rectangularly arranged pixels. These sensors are developed to read out a modular high resolution scintillating fiber tracker. Key properties like breakdown voltage, gain and photon detection efficiency (PDE) are found to be homogeneous over all 32 channels of an SiPM array. This could make scintillating fiber trackers with SiPM array readout a promising alternative to available tracker technologies, if noise properties and the PDE are improved

Explosive cooperation in social dilemmas on higher-order networks

Understanding how cooperative behaviors can emerge from competitive interactions is an open problem in biology and social sciences. While interactions are usually modeled as pairwise networks, the units of many real-world systems can also interact in groups of three or more. Here, we introduce a general framework to extend pairwise games to higher-order networks. By studying social dilemmas on hypergraphs with a tunable structure, we find an explosive transition to cooperation triggered by a critical number of higher-order games. The associated bistable regime implies that an initial critical mass of cooperators is also required for the emergence of prosocial behavior. Our results show that higher-order interactions provide a novel explanation for the survival of cooperation

Evolution equations for slowly rotating stars

We present a hyperbolic formulation of the evolution equations describing non-radial perturbations of slowly rotating relativistic stars in the Regge--Wheeler gauge. We demonstrate the stability preperties of the new evolution set of equations and compute the polar w-modes for slowly rotating stars.Comment: 27 pages, 2 figure