The rigidity of choice: lifetime savings under information-processing constraints

This paper studies the implications of information-processing limits on the consumption and savings behavior of households through time. It presents a dynamic model in which consumers rationally choose the size and scope of the information they want to process about their fi�nancial possibilities, constrained by a Shannon channel. The model predicts that people with higher degrees of risk aversion rationally choose higher information. This happens for precautionary reasons since, with fi�nite processing rate, risk averse consumers prefer to be well informed about their fi�nancial possibilities before implementing consumption plan. Moreover, numerical results show that consumers with processing capacity constraints have asymmetric responses to shocks, with negative shocks producing more persistent effects than positive ones. This asymmetry results into more savings. I show that the predictions of the model can be effectively used to study the impact of tax reforms on consumers spending. The results are qualitatively consistent with the evidence on tax rebates (2001, 2008).Consumption, Rational Inattention, Dynamic programming

'Rational inattention' guides overloaded brains, helps economists understand market behavior

Between Internet news sources, social media and email, people are awash in information, most of it accessible at near-zero cost. Yet, humans possess only a finite capacity to process all of it. The average email user, for example, receives dozens of messages per day. The messages can’t all receive equal attention. How carefully does someone read an email from a sibling or friend before crafting a reply? How closely does a person read an email from the boss?> ; Limitations on the ability to process information force people to make choices regarding the subjects to which they pay more or less attention. Economists have long acknowledged the existence of human cognitive capacities, but only in recent years have models embodying such limits known as “rational inattention” found their way into mainstream macroeconomics.> ; Rational inattention models have a broad range of applications. They may reconcile relatively unchanged prices and volatile ones and how the two play out in aggregate demand in the U.S. economy. Moreover, such models can capture salient features of the business cycle, providing a rationale for sharp contractions or slower expansions. Finally, rational inattention models have significant implications for monetary policy. Since the focus of these models revolves around formation of peoples’ expectations, understanding how individuals perceive the economy is instrumental to policymakers’ efforts to achieve output and price stabilization objectives.Information technology ; Macroeconomics - Econometric models ; Business cycles

Experimental evidence on rational inattention

We show that rational inattention theory of Sims (2003) provides a rationalization of choice models à la Luce and gives a structural interpretation to probability curvature parameters as reflecting costs of processing information. We use data from a behavioral experiment to show that people behave according to predictions of the theory. We estimate attitudes to risk and costs of information for individual participants and document overwhelming heterogeneity in these parameters among a relatively homogeneous sample of people. We characterize, both theoretically and empirically, the aggregation biases this heterogeneity implies and find these biases to be substantial.Risk management ; Econometrics

Matching Outreach and Financial Sustainability An Assessed Accounting Framework in Evaluating Performance of Microfinance Project

The theoretical framework, consisting of thetraditional literature on performance is contextualized accordingto the specific rationale that characterizes the microfinanceoperation. Performance evaluation, moreover, is not a newsubject matter in microfinance. On the international level,different models of evaluation have been developed over thecourse of the last years. This work proposes an alternativeperformance measure for microfinance. The innovative force isinspired with respect to three specific requirements: the first isthe strict derivation of the classical doctrine on performanceanalysis – that assures the rigorousness and reliability; itsadaptability to formal institutions, including non-profitorganizations that are less formal and complex; the need to find acorrect balance between the two dichotomous objectives thatcharacterize microfinance, that is the financial sustainability andoutreach

Development of an improved Pseudoalteromonas haloplanktis TAC125 strain for recombinant protein secretion at low temperature

Background: In a previous paper, we reported the accomplishment of a cold gene-expression system for the recombinant secretion of heterologous proteins in Pseudoalteromonas haloplanktis TAC125. This system makes use of the psychrophilic α-amylase from P. haloplanktis TAB23 as secretion carrier, and allows an effective extra-cellular addressing of recombinant proteins. However, Pseudoalteromonales are reported to secrete a wide range of extra-cellular proteases. This feature works against the efficiency of the cold-adapted secretion system, because of the proteolytic degradation of recombinant products. The aim of this study is the construction of a P. haloplanktis TAC125 mutant strain with reduced extra-cellular proteolytic activity. Results: P. haloplanktis TAC125 culture medium resulted to contain multiple and heterogeneous proteases. Since the annotation of the Antarctic bacterium genome highlighted the presence of only one canonical secretion machinery, namely the Type II secretion pathway (T2SS), we have inactivated this secretion system by a gene insertion strategy. A mutant strain of P. haloplanktis TAC125 in which the gspE gene was knocked-out, actually displayed a remarkable reduction of the extra-cellular protease secretion. Quite interestingly this strain still retained the ability to secrete the psychrophilic amylase as efficiently as the wild type. Moreover, the decrease in extra-cellular proteolytic activity resulted in a substantial improvement in the stability of the secreted amylase-β-lactamase chimera. Conclusion: Here we report a cell engineering approach to the construction of a P. haloplanktis TAC125 strain with reduced extra-cellular protease activity. The improved strain is able to secrete the psychrophilic α-amylase (the carrier of our recombinant secretion system), while it displays a significant reduction of protease content in the culture medium. These features make the gspE mutant an improved host with a remarkable biotechnological potential in recombinant protein secretion at low temperature. Moreover this work demonstrates that P. haloplanktis TAC125 is a versatile psychrophilic host for recombinant protein production since it can be easily improved by a directed engineering approach. To the best of our knowledge, this is the first described example of a strain improvement strategy applied to an Antarctic bacterium

Methylmercury and Measures of Attention Deficits in the ELEMENT Cohort.

Attention-deficit/hyperactivity disorder (ADHD) is one of the most common psychiatric disorders in school-age children and is the cause of multiple burdens related to healthcare costs, academic performance, and later employment. As such, its etiology represents a major public health concern. While genetics play a large role in the etiology of ADHD, multiple environmental exposures may contribute to risk. Here, we investigate the role of one toxicant, methylmercury (MeHg), measured in hair and blood, and its possible interactions with both other toxicants (lead, Pb) and a series of candidate genes. Additionally, we examined possible associations of MeHg exposure with the acoustic startle reflex (ASR) and the sensorimotor gating process, prepulse inhibition (PPI), in which deficits have been observed in individuals with attention deficits. Participants were recruited from the Early Life Exposure in Mexico to Environmental Toxicants (ELEMENT) study, a longitudinal birth cohort that began in the 1990s. ADHD symptoms were screened using the Conners’ Continuous Performance Test II (CPTII) and the Conners’ Rating Scales-Revised (CRS-R). We found no significant associations between prenatal and postnatal MeHg exposures and ADHD screening scores. No interaction was seen for concurrent exposures to MeHg and Pb. For prenatal exposure, generally, interactions between the two metals corresponded to increasing attention deficits scores in trimester 1, while interactions between the two corresponded to decreasing attention deficits scores in trimester 2, and no pattern was seen in trimester 3. Additionally, we found that associations between hair Hg concentration and attention measures differed by dopamine receptor D4 (DRD4) and catechol-O-methyltransferase (COMT) genotype. ASR without a prepulse was non-linearly associated with MeHg exposure. For ASR response magnitudes with prepulses, higher MeHg generally corresponded to higher ASR magnitudes, especially in the right tail of their respective distributions. No significant associations were seen between MeHg and PPI. This research adds to our understanding of how environmental influences like MeHg can play a role in the development of attention deficits in children and adolescents.PhDToxicologyUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/116742/1/rltuti_1.pd

Economia della banca e cultura: sono sufficienti saperi tecnici parziali?

Le radici finanziarie della lunga e impietosa crisi economica e finanziaria globale richiedono studi storici e analisi specifiche da più punti di vista. In questo ambito e in questa prospettiva, gli studiosi di economia degli intermediari finanziari possono dare contributi notevoli e significativamente integrati con quelli di matrice diversa: sono anche i fondamenti della gestione aziendale degli intermediari finanziari – in particolare delle banche – e i rischi da essi assunti a determinare squilibri che portano a crisi; e sono le situazioni e le prospettive economico-finanziarie generali che definiscono i contesti in cui le banche operano. Studi e analisi storico-economiche hanno dunque bisogno di aggiungere il punto di vista di chi opera prevalentemente con strumenti di economia e finanza aziendale e di economia e finanza generale; così come aziendalisti ed economisti possono saper leggere più profondamente ove sappiano guardare anche al passato e alle riflessioni che ne sono scaturite e ne scaturiscono per interpretare il presente e impostare decisioni per il futuro

Rationally inattentive macroeconomic wedges

This paper argues that the solution to a dynamic optimization problem of consumption and labor under finite information-processing capacity can simultaneously explain the intertemporal and intratemporal labor wedges. It presents a partial equilibrium model, where a representative risk adverse consumer chooses information about wealth with limited attention. The paper compares ex-post realizations of models with finite and infinite capacity. The model produces macroeconomic wedges and measures of elasticity consistent with the literature. These findings suggest that a consumption-labor model with information-processing constraints can explain the difference between predicted and observed consumption and employment behavior.Consumption (Economics) ; Labor market ; Econometric models ; Consumer behavior

Processing savings and work decisions through Shannon's channels

This paper argues that constraining people to choose consumption and labor under fi�nite Shannon capacity produces results in line with U.S. business cycle data as well as secular movements in consumption and labor supply. The model has a simple partial equilibrium setting in which risk averse consumers keep high labor supply and low consumption profi�le at early stage of life to hedge against wealth fluctuations. They rationally choose to keep consumption and labor unchanged until they collect enough information. I fi�nd that at high frequency consumption appears to be more sluggish than labor supply. However, when people decide to change consumption they do so by a large amount. This combination leads to higher variance of consumption with respect to labor supply. The model also finds high persistence and strong comovement of consumption and employment and delayed response of consumption and labor with respect to shocks to wages. Positive changes in wages generate an increase in long run value of consumption while the change in long run values of labor is negligible. Furthermore, the effects on labor and consumption of a shock to wages propagate slowly over time due to people's endogenous choice of information. These �findings suggest that rational inattention offers a promising avenue to bridge the gap between theory and U.S. data at business cycle frequency as well as in the long run.Savings and labor decisions, Shannon capacity, US business cycle