A model of financial fragility

This paper presents a dynamic, stochastic game-theoretic model of financial fragility. The model has two essential features. First, interrelated portfolios and payment commitments forge financial linkages among agents. Second, iid shocks to investment projects’ operations at a single date cause some projects to fail. Investors who experience losses from project failures reallocate their portfolios, thereby breaking some linkages. In the Pareto-efficient symmetric equilibrium studied, two related types of financial crises can occur in response. One occurs gradually as defaults spread, causing even more links to break. An economy is more fragile ex post the more severe this financial crisis. The other type of crisis occurs instantaneously when forward-looking investors preemptively shift their wealth into a safe asset in anticipation of the contagion affecting them in the future. An economy is more fragile ex ante the earlier all of its linkages break from such a crisis. The paper also considers whether fragility is worse for larger economies.Financial crises

Structure-preserving desynchronization of minority games

Perfect synchronicity in $N$-player games is a useful theoretical dream, but communication delays are inevitable and may result in asynchronous interactions. Some systems such as financial markets are asynchronous by design, and yet most theoretical models assume perfectly synchronized actions. We propose a general method to transform standard models of adaptive agents into asynchronous systems while preserving their global structure under some conditions. Using the Minority Game as an example, we find that the phase and fluctuations structure of the standard game subsists even in maximally asynchronous deterministic case, but that it disappears if too much stochasticity is added to the temporal structure of interaction. Allowing for heterogeneous communication speeds and activity patterns gives rise to a new information ecology that we study in details.Comment: 6 pages, 7 figures. New version removed a section and found a new phase transitio

On the Computational Complexity of Measuring Global Stability of Banking Networks

Threats on the stability of a financial system may severely affect the functioning of the entire economy, and thus considerable emphasis is placed on the analyzing the cause and effect of such threats. The financial crisis in the current and past decade has shown that one important cause of instability in global markets is the so-called financial contagion, namely the spreading of instabilities or failures of individual components of the network to other, perhaps healthier, components. This leads to a natural question of whether the regulatory authorities could have predicted and perhaps mitigated the current economic crisis by effective computations of some stability measure of the banking networks. Motivated by such observations, we consider the problem of defining and evaluating stabilities of both homogeneous and heterogeneous banking networks against propagation of synchronous idiosyncratic shocks given to a subset of banks. We formalize the homogeneous banking network model of Nier et al. and its corresponding heterogeneous version, formalize the synchronous shock propagation procedures, define two appropriate stability measures and investigate the computational complexities of evaluating these measures for various network topologies and parameters of interest. Our results and proofs also shed some light on the properties of topologies and parameters of the network that may lead to higher or lower stabilities.Comment: to appear in Algorithmic

Loss of the xeroderma pigmentosum group B protein binding site impairs p210 BCR/ABL1 leukemogenic activity

Previous studies have demonstrated that p210 BCR/ABL1 interacts directly with the xeroderma pigmentosum group B (XPB) protein, and that XPB is phosphorylated on tyrosine in cells that express p210 BCR/ABL1. In the current study, we have constructed a p210 BCR/ABL1 mutant that can no longer bind to XPB. The mutant has normal kinase activity and interacts with GRB2, but can no longer phosphorylate XPB. Loss of XPB binding is associated with reduced expression of c-MYC and reduced transforming potential in ex-vivo clonogenicity assays, but does not affect nucleotide excision repair in lymphoid or myeloid cells. When examined in a bone marrow transplantation (BMT) model for chronic myelogenous leukemia, mice that express the mutant exhibit attenuated myeloproliferation and lymphoproliferation when compared with mice that express unmodified p210 BCR/ABL1. Thus, the mutant-transplanted mice show predominantly neutrophilic expansion and altered progenitor expansion, and have significantly extended lifespans. This was confirmed in a BMT model for B-cell acute lymphoblastic leukemia, wherein the majority of the mutant-transplanted mice remain disease free. These results suggest that the interaction between p210 BCR/ABL1 and XPB can contribute to disease progression by influencing the lineage commitment of lymphoid and myeloid progenitors

Latent KSHV Infection of Endothelial Cells Induces Integrin Beta3 to Activate Angiogenic Phenotypes

Kaposi's Sarcoma (KS), the most common tumor of AIDS patients, is a highly vascularized tumor supporting large amounts of angiogenesis. The main cell type of KS tumors is the spindle cell, a cell of endothelial origin, the primary cell type involved in angiogenesis. Kaposi's Sarcoma-associated herpesvirus (KSHV) is the etiologic agent of KS and is likely involved in both tumor formation and the induction of angiogenesis. Integrins, and specifically integrin αVβ3, have known roles in both tumor induction and angiogenesis. αVβ3 is also important for KSHV infection as it has been shown to be involved in KSHV entry into cells. We found that during latent infection of endothelial cells KSHV induces the expression of integrin β3 leading to increased surface levels of αVβ3. Signaling molecules downstream of integrins, including FAK and Src, are activated during viral latency. Integrin activation by KSHV is necessary for the KSHV-associated upregulation of a number of angiogenic phenotypes during latent infection including adhesion and motility. Additionally, KSHV-infected cells become more reliant on αVβ3 for capillary like formation in three dimensional culture. KSHV induction of integrin β3, leading to induction of angiogenic and cancer cell phenotypes during latency, is likely to be important for KS tumor formation and potentially provides a novel target for treating KS tumors

Divergent Effects of Human Cytomegalovirus and Herpes Simplex Virus-1 on Cellular Metabolism

Viruses rely on the metabolic network of the host cell to provide energy and macromolecular precursors to fuel viral replication. Here we used mass spectrometry to examine the impact of two related herpesviruses, human cytomegalovirus (HCMV) and herpes simplex virus type-1 (HSV-1), on the metabolism of fibroblast and epithelial host cells. Each virus triggered strong metabolic changes that were conserved across different host cell types. The metabolic effects of the two viruses were, however, largely distinct. HCMV but not HSV-1 increased glycolytic flux. HCMV profoundly increased TCA compound levels and flow of two carbon units required for TCA cycle turning and fatty acid synthesis. HSV-1 increased anapleurotic influx to the TCA cycle through pyruvate carboxylase, feeding pyrimidine biosynthesis. Thus, these two related herpesviruses drive diverse host cells to execute distinct, virus-specific metabolic programs. Current drugs target nucleotide metabolism for treatment of both viruses. Although our results confirm that this is a robust target for HSV-1, therapeutic interventions at other points in metabolism might prove more effective for treatment of HCMV