Efficiency of Continuous Double Auctions under Individual Evolutionary Learning with Full or Limited Information

In this paper we explore how specific aspects of market transparency and agents' behavior affect the efficiency of the market outcome. In particular, we are interested whether learning behavior with and without information about actions of other participants improves market efficiency. We consider a simple market for a homogeneous good populated by buyers and sellers. The valuations of the buyers and the costs of the sellers are given exogenously. Agents are involved in consecutive trading sessions, which are organized as a continuous double auction with electronic book. Using Individual Evolutionary Learning agents submit price bids and offers, trying to learn the most profitable strategy by looking at their realized and counterfactual or "foregone" payoffs. We find that learning outcomes heavily depend on information treatments. Under full information about actions of others, agents' orders tend to be similar, while under limited information agents tend to submit their valuations/costs. This behavioral outcome results in higher price volatility for the latter treatment. We also find that learning improves allocative efficiency when compared with to outcomes with Zero-Intelligent traders.

Political Competition in a Model of Economic Growth; Some Theoretical Results

We study a one-sector model of economic growth in which decisions about capital accumulation and consumption are made through a political process of two candidate competition. Each voter's utility for a consumption stream is the discounted value of that voter's utility of consumption in each period. We consider the case when voters' one period utility functions for consumption are identical but discount factors are different. We are particularly interested in the conditions under which neoclassical optimal growth paths occur, and conditions in which political business cycles occur. The answer depends on the ability or inability of the candidates to commit to multi-period investment strategies. If candidates can commit indefinitely into the future, then a political (majority rule) equilibrium path will not exist if all discount factors are different. For any feasible consumption path, there is a perturbation which is majority preferred to it. For any neoclassical optimal path there exists a perturbated path that is preferred to it either unanimously or by all but one voter. These results are true even if the perturbations can differ at no more than three consecutive periods from the original path. If candidates are unable to commit to multi-period plans, we show there is a unique subgame perfect, stationary, symmetric equilibrium to the infinite horizon two candidate competition game; namely the optimal consumption path for the median voter. The equilibrium is unique in the following sense: It is the unique limit of subgame perfect equilibria to the finite horizon electoral game. In the case when candidates can commit for a finite time into the future, we show that a stationary minmax path (a path which minimizes the maximum vote that can be obtained against it) yields a political business cycle

Political Competition in a Model of Economic Growth; Some Theoretical Results

We study a one-sector model of economic growth in which decisions about capital accumulation and consumption are made through a political process of two candidate competition. Each voter's utility for a consumption stream is the discounted value of that voter's utility of consumption in each period. We consider the case when voters' one period utility functions for consumption are identical but discount factors are different. We are particularly interested in the conditions under which neoclassical optimal growth paths occur, and conditions in which political business cycles occur. The answer depends on the ability or inability of the candidates to commit to multi-period investment strategies. If candidates can commit indefinitely into the future, then a political (majority rule) equilibrium path will not exist if all discount factors are different. For any feasible consumption path, there is a perturbation which is majority preferred to it. For any neoclassical optimal path there exists a perturbated path that is preferred to it either unanimously or by all but one voter. These results are true even if the perturbations can differ at no more than three consecutive periods from the original path. If candidates are unable to commit to multi-period plans, we show there is a unique subgame perfect, stationary, symmetric equilibrium to the infinite horizon two candidate competition game; namely the optimal consumption path for the median voter. The equilibrium is unique in the following sense: It is the unique limit of subgame perfect equilibria to the finite horizon electoral game. In the case when candidates can commit for a finite time into the future, we show that a stationary minmax path (a path which minimizes the maximum vote that can be obtained against it) yields a political business cycle

Variability of atmospheric dimethylsulphide over the southern Indian Ocean due to changes in ultraviolet radiation

Dimethylsulphide (DMS) is a climatically important component of global biogeochemical cycles, through its role in the sulphur cycle. Changes in ultraviolet radiation (UV) exhibit both positive and negative forcings on the dynamics of production and turnover of DMS and its precursor dimethylsulphoniopropionate (DMSP). In this study we investigate the net forcing of UV on atmospheric DMS. The work is based on a 10-year record of observed DMS at Amsterdam Island in the southern Indian Ocean, and satellite-based retrievals of surface UV and photosynthetically active radiation (PAR). The results show an inverse relationship between UV radiation and atmospheric DMS associated with extreme changes (defined as the greatest 5%) in daily UV, independent of changes in wind speed, sea surface temperature, and PAR

The martyrdom effect : when pain and effort increase prosocial contributions

Most theories of motivation and behavior (and lay intuitions alike) consider pain and effort to be deterrents. In contrast to this widely held view, we provide evidence that the prospect of enduring pain and exerting effort for a prosocial cause can promote contributions to the cause. Specifically, we show that willingness to contribute to a charitable or collective cause increases when the contribution process is expected to be painful and effortful rather than easy and enjoyable. Across five experiments, we document this “martyrdom effect,” show that the observed patterns defy standard economic and psychological accounts, and identify a mediator and moderator of the effect. Experiment 1 showed that people are willing to donate more to charity when they anticipate having to suffer to raise money. Experiment 2 extended these findings to a non-charity laboratory context that involved real money and actual pain. Experiment 3 demonstrated that the martyrdom effect is not the result of an attribute substitution strategy (whereby people use the amount of pain and effort involved in fundraising to determine donation worthiness). Experiment 4 showed that perceptions of meaningfulness partially mediate the martyrdom effect. Finally, Experiment 5 demonstrated that the nature of the prosocial cause moderates the martyrdom effect: the effect is strongest for causes associated with human suffering. We propose that anticipated pain and effort lead people to ascribe greater meaning to their contributions and to the experience of contributing, thereby motivating higher prosocial contributions. We conclude by considering some implications of this puzzling phenomenon. Copyright © 2011 John Wiley & Sons, Ltd

Social Preferences, Skill Segregation and Wage Dynamics

We study the earning structure and the equilibrium asignment of workers to firms in a model in which workers have social preferences, and skills are perfectly substitutable in production. Firms offer long-term contracts, and we allow for frictions in the labour market in the form of mobility costs. The model delivers specific predictions about the nature of worker flows, about the characteristic of workplace skill segregation, and about wage dispersion both within and cross firms. We shows that long-term contracts in the resence of social preferences associate within-firm wage dispersion with novel "internal labour market" features such as gradual promotions, productivity-unrelated wage increases, and downward wage flexibility. These three dynamic features lead to productivity-unrelated wage volatily within firms.Publicad

The Promise of Prediction Markets

Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors. We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit the private sector and government alike.Technology and Industry

Cooperation and Contagion in Web-Based, Networked Public Goods Experiments

A longstanding idea in the literature on human cooperation is that cooperation should be reinforced when conditional cooperators are more likely to interact. In the context of social networks, this idea implies that cooperation should fare better in highly clustered networks such as cliques than in networks with low clustering such as random networks. To test this hypothesis, we conducted a series of web-based experiments, in which 24 individuals played a local public goods game arranged on one of five network topologies that varied between disconnected cliques and a random regular graph. In contrast with previous theoretical work, we found that network topology had no significant effect on average contributions. This result implies either that individuals are not conditional cooperators, or else that cooperation does not benefit from positive reinforcement between connected neighbors. We then tested both of these possibilities in two subsequent series of experiments in which artificial seed players were introduced, making either full or zero contributions. First, we found that although players did generally behave like conditional cooperators, they were as likely to decrease their contributions in response to low contributing neighbors as they were to increase their contributions in response to high contributing neighbors. Second, we found that positive effects of cooperation were contagious only to direct neighbors in the network. In total we report on 113 human subjects experiments, highlighting the speed, flexibility, and cost-effectiveness of web-based experiments over those conducted in physical labs