The Equity Premium Puzzle: An Application of an Agent-Based Evolutionary Model

We describe an agent-based model of a financial market with a stock and a bond. Agents compete in repeated rounds, decide whether to acquire costly information and can pick one of 16 strategies to allocate their investments, under evolutionary pressure driven by the comparison of the realized short-term revenues from trading. We show that, while in- formed traders survive in some cases, the equilibrium shares are strongly biased in favor of strategies that make little use of information and sys- tematically overestimate the riskiness of the stock. As a consequence, the majority of the population ends up in buying fewer stocks than would be otherwise expected or deemed rational. This evolutionary dynamics offers a novel way to explain the equity pre- mium puzzle first described by Mehra and Prescott (The equity pre- mium: A puzzle. Journal of Monetary Economics 1985), according to which it’s hard to find reasons for the widespread lack of investment in risky assets. Evolution based on a straightforward comparison of rev- enues is a simple and cognitively appealing avenue to reach a population of traders using (over-)cautious strategies to curb the risk of long-term “financial extinction”. Simulations run in NetLogo also demonstrate that very little information may be used in noisy markets or when the cost of information is substantial

Non-Macro-Based Google Searches, Uncertainty, and Real Economic Activity

We propose a set of novel non-macro-based uncertainty indicators that rely on the frequency of Google searches (NM-GSIs) for the following health-, environmental-, security-, and political-related topics: \u201cSymptom\u201d \u201cPollution\u201d \u201cTerrorism\u201d and \u201cElection\u201d. By means of VAR investigations, we document that an intensification of people interest in non-macro-based topics harms the US real economic activity. In particular, NM-GSI shocks generate (i) a significant drop in consumer credit and (ii) a mild decrease (increase) in production (unemployment) levels. Noteworthy, rising non-macro-based uncertainty is found to have stronger influence on the outstanding level of consumer credit than rising macro-based uncertainty. Our findings suggest that increasing interest in specific non-macro-based topics might be associated with raising people's anxiety. A battery of robustness checks confirms our main findings

PGR5 and NDH-1 systems do not function as protective electron acceptors but mitigate the consequences of PSI inhibition

Avoidance of photoinhibition at photosystem (PS)I is based on synchronized function of PSII, PSI, Cytochrome b(6)f and stromal electron acceptors. Here, we used a special light regime, PSI photoinhibition treatment (PIT), in order to specifically inhibit PSI by accumulating excess electrons at the photosystem (Tikkanen and Grebe, 2018). In the analysis, Arabidopsis thaliana WT was compared to the pgr5 and ndho mutants, deficient in one of the two main cyclic electron transfer pathways described to function as protective alternative electron acceptors of PSI. The aim was to investigate whether the PGR5 (pgr5) and the type 1 NADH dehydrogenase (NDH-1) (ndho) systems protect PSI from excess electron stress and whether they help plants to cope with the consequences of PSI photoinhibition. First, our data reveals that neither PGR5 nor NDH-1 system protects PSI from a sudden burst of electrons. This strongly suggests that these systems in Arabidopsis thaliana do not function as direct acceptors of electrons delivered from PSII to PSI - contrasting with the flavodiiron proteins that were found to make Physcomitrella patens PSI resistant to the PIT. Second, it is demonstrated that under light-limiting conditions, the electron transfer rate at PSII is linearly dependent on the amount of functional PSI in all genotypes, while under excess light, the PGR5-dependent control of electron flow at the Cytochrome b(6)f complex overrides the effect of PSI inhibition. Finally, the PIT is shown to increase the amount of PGR5 and NDH-1 as well as of PTOX, suggesting that they mitigate further damage to PSI after photoinhibition rather than protect against it

Hepatitis C virus quasispecies in chronically infected children subjected to interferon–ribavirin therapy

Accumulating evidence suggests that certain features of hepatitis C virus (HCV), especially its high genetic variability, might be responsible for the low efficiency of anti-HCV treatment. Here, we present a bioinformatic analysis of HCV-1a populations isolated from 23 children with chronic hepatitis C (CHC) subjected to interferon–ribavirin therapy. The structures of the viral quasispecies were established based on a 132-amino-acid sequence derived from E1/E2 protein, including hypervariable region 1 (HVR1). Two types of HCV populations were identified. The first type, found in non-responders, contained a small number of closely related variants. The second type, characteristic for sustained responders, was composed of a large number of distantly associated equal-rank variants. Comparison of 445 HVR1 sequences showed that a significant number of variants present in non-responding patients are closely related, suggesting that certain, still unidentified properties of the pathogen may be key factors determining the result of CHC treatment

Expectations and Uncertainty: A Common-Source Infection Model for Selected European Countries

We present a common-source infection model for explaining the formation of expectations by households. Starting from the framework of "Macroeconomic expectations of household and professional forecasters" (C.D. Carroll, The Quarterly Journal of Economics, 2003), we augment the original model assuming that also uninformed individuals are able to update expectations according to a naive econometric process. In this novel framework, a key role is played by the parameter measuring the prob- ability of being informed: the dynamics of this factor over time capture the level of uncertainty perceived by households. This new framework is applied to study unemployment expectations for a selected group of European countries (France, Germany, Italy and the UK). Our results show that: (i) the novel framework is supported by data on unemployment expectations; and (ii) the probability of being informed is (negatively) correlated with the level of uncertainty spread by newspapers and conveyed by Internet

Global risks, the macroeconomy, and asset prices

We propose a novel index of global risks awareness (GRAI) based on the most concerning risks—classified in five categories (economic, environmental, geopolitical, societal, and technological)—reported by the World Economic Forum (WEF) according to the potential impact and likelihood occurrence. The degree of public concern toward these risks is captured by Google search volumes on topics having the same or similar wording of that one of the WEF Global Risk Report. The dynamics of our GRAI exhibits several spillover episodes and indicates that concerns on the five different categories of global risks are—on average—highly interconnected. We further examine the interconnection between global risks perceptions and the macroeconomy and find that concerns on economic-, geopolitical-, and societal-related risks are net shock transmitters, whereas the macroeconomic variables are largely net receivers. Finally, we perform standard cross-sectional asset pricing tests and provide evidence that rising interconnection among global risks awareness commands a positive and statistically significant risk premium

Toward Enhanced Fixation of CO2 in Aquatic Biomass: Focus on Microalgae

The need to reduce the CO2 footprint of human activities calls for the utilization of new means of production and new sources of products. Microalgae are a very promising source of a large variety of products, from fuels to chemicals for multiple industrial applications (e.g., dyes, pharmaceutical products, cosmetics, food and feed, new materials for high tech manufacture), and for processes such as wastewater treatment. Algae, as photosynthetic organisms, use light to energize the synthesis of organic matter and differently from most terrestrial plants, can be cultured on land that is not used for crop production. We describe the main factors contributing to microalgae productivity in artificial cultivation systems and discuss the research areas that still need investigation in order to pave the way to the generation of photosynthetic cell factories. We shall comment on the main caveats of the possible mode of improving photosynthetic efficiency and to optimize the partitioning of fixed C to products of commercial relevance. We address the problem of the selection of the appropriate strain and of the consequences of their diverse physiology and culture conditions for a successful commercial application. Finally, we shall provide state of the art information on cell factories chassis by means of synthetic biology approaches to produce chemicals of interest

Immigration, Uncertainty, and Macroeconomic Dynamics

This paper examines the macroeconomic effects of rising migration uncertainty in four advanced economies (i.e. US, UK, Germany and France). Migration uncertainty is first captured by the Migration Policy Uncertainty (MPUI) and the Migration Fear (MFI) news‐based indexes developed by Baker et al. (Immigration fears and policy uncertainty, 2015), and then by a novel Google Trend Migration Uncertainty Index (GTMU) based on the frequency of Internet searches for the term ‘immigration’. VAR investigations suggest that the macroeconomic implications of rising migration uncertainty differ across countries. Moreover, news‐based and Google search‐based migration fear shocks generate different macroeconomic effects. For instance, in the US (France), MPUI, MFI and GTMU shocks all improve (undermine) production and labour market conditions in the medium run. For Germany and the UK, mixed evidence is found, suggesting that increasing media attention on migration phenomena and rising population's interest in migration‐related issues influence people's mood differently. The observed heterogeneity in the macroeconomic effects of rising migration uncertainty can be explained by cross‐country gaps in (a) the level of labour market rigidity, (b) the degree of people's happiness and life satisfaction and (c) the percentage of graduates