Black swans or dragon kings? A simple test for deviations from the power law

We develop a simple test for deviations from power law tails, which is based on the asymptotic properties of the empirical distribution function. We use this test to answer the question whether great natural disasters, financial crashes or electricity price spikes should be classified as dragon kings or 'only' as black swans

Block-Transitive Designs in Affine Spaces

This paper deals with block-transitive $t$-$(v,k,\lambda)$ designs in affine spaces for large $t$, with a focus on the important index $\lambda=1$ case. We prove that there are no non-trivial 5-$(v,k,1)$ designs admitting a block-transitive group of automorphisms that is of affine type. Moreover, we show that the corresponding non-existence result holds for 4-$(v,k,1)$ designs, except possibly when the group is one-dimensional affine. Our approach involves a consideration of the finite 2-homogeneous affine permutation groups.Comment: 10 pages; to appear in: "Designs, Codes and Cryptography

Perfect Secrecy Systems Immune to Spoofing Attacks

We present novel perfect secrecy systems that provide immunity to spoofing attacks under equiprobable source probability distributions. On the theoretical side, relying on an existence result for $t$-designs by Teirlinck, our construction method constructively generates systems that can reach an arbitrary high level of security. On the practical side, we obtain, via cyclic difference families, very efficient constructions of new optimal systems that are onefold secure against spoofing. Moreover, we construct, by means of $t$-designs for large values of $t$, the first near-optimal systems that are 5- and 6-fold secure as well as further systems with a feasible number of keys that are 7-fold secure against spoofing. We apply our results furthermore to a recently extended authentication model, where the opponent has access to a verification oracle. We obtain this way novel perfect secrecy systems with immunity to spoofing in the verification oracle model.Comment: 10 pages (double-column); to appear in "International Journal of Information Security

Attacks on quantum key distribution protocols that employ non-ITS authentication

We demonstrate how adversaries with unbounded computing resources can break Quantum Key Distribution (QKD) protocols which employ a particular message authentication code suggested previously. This authentication code, featuring low key consumption, is not Information-Theoretically Secure (ITS) since for each message the eavesdropper has intercepted she is able to send a different message from a set of messages that she can calculate by finding collisions of a cryptographic hash function. However, when this authentication code was introduced it was shown to prevent straightforward Man-In-The-Middle (MITM) attacks against QKD protocols. In this paper, we prove that the set of messages that collide with any given message under this authentication code contains with high probability a message that has small Hamming distance to any other given message. Based on this fact we present extended MITM attacks against different versions of BB84 QKD protocols using the addressed authentication code; for three protocols we describe every single action taken by the adversary. For all protocols the adversary can obtain complete knowledge of the key, and for most protocols her success probability in doing so approaches unity. Since the attacks work against all authentication methods which allow to calculate colliding messages, the underlying building blocks of the presented attacks expose the potential pitfalls arising as a consequence of non-ITS authentication in QKD-postprocessing. We propose countermeasures, increasing the eavesdroppers demand for computational power, and also prove necessary and sufficient conditions for upgrading the discussed authentication code to the ITS level.Comment: 34 page

Lower bound for the quantum capacity of a discrete memoryless quantum channel

We generalize the random coding argument of stabilizer codes and derive a lower bound on the quantum capacity of an arbitrary discrete memoryless quantum channel. For the depolarizing channel, our lower bound coincides with that obtained by Bennett et al. We also slightly improve the quantum Gilbert-Varshamov bound for general stabilizer codes, and establish an analogue of the quantum Gilbert-Varshamov bound for linear stabilizer codes. Our proof is restricted to the binary quantum channels, but its extension of to l-adic channels is straightforward.Comment: 16 pages, REVTeX4. To appear in J. Math. Phys. A critical error in fidelity calculation was corrected by using Hamada's result (quant-ph/0112103). In the third version, we simplified formula and derivation of the lower bound by proving p(Gamma)+q(Gamma)=1. In the second version, we added an analogue of the quantum Gilbert-Varshamov bound for linear stabilizer code

The Threat of Capital Drain: A Rationale for Public Banks?

This paper yields a rationale for why subsidized public banks may be desirable from a regional perspective in a financially integrated economy. We present a model with credit rationing and heterogeneous regions in which public banks prevent a capital drain from poorer to richer regions by subsidizing local depositors, for example, through a public guarantee. Under some conditions, cooperative banks can perform the same function without any subsidization; however, they may be crowded out by public banks. We also discuss the impact of the political structure on the emergence of public banks in a political-economy setting and the role of interregional mobility

Directed Graph Representation of Half-Rate Additive Codes over GF(4)

We show that (n,2^n) additive codes over GF(4) can be represented as directed graphs. This generalizes earlier results on self-dual additive codes over GF(4), which correspond to undirected graphs. Graph representation reduces the complexity of code classification, and enables us to classify additive (n,2^n) codes over GF(4) of length up to 7. From this we also derive classifications of isodual and formally self-dual codes. We introduce new constructions of circulant and bordered circulant directed graph codes, and show that these codes will always be isodual. A computer search of all such codes of length up to 26 reveals that these constructions produce many codes of high minimum distance. In particular, we find new near-extremal formally self-dual codes of length 11 and 13, and isodual codes of length 24, 25, and 26 with better minimum distance than the best known self-dual codes.Comment: Presented at International Workshop on Coding and Cryptography (WCC 2009), 10-15 May 2009, Ullensvang, Norway. (14 pages, 2 figures