Uninsured Risks, Loan Contracts and the Declining Equity Premium

Using a two period model with moral hazard and uninsured risk, we argue that the decline in equity premium from its historically high level is due to a gradual elimination of barriers to universal banking. The loan contracts set up by financial intermediaries became more complete in nature with the advent of universal banking in the 90s following the Gramm-Leach-Billy Act. Hence, it is the nature of the loan contracts, not just the borrowing constraint and uninsured risks that is more fundamental in explaining the size of the equity premium.

Towards a Queueing-Based Framework for In-Network Function Computation

We seek to develop network algorithms for function computation in sensor networks. Specifically, we want dynamic joint aggregation, routing, and scheduling algorithms that have analytically provable performance benefits due to in-network computation as compared to simple data forwarding. To this end, we define a class of functions, the Fully-Multiplexible functions, which includes several functions such as parity, MAX, and k th -order statistics. For such functions we exactly characterize the maximum achievable refresh rate of the network in terms of an underlying graph primitive, the min-mincut. In acyclic wireline networks, we show that the maximum refresh rate is achievable by a simple algorithm that is dynamic, distributed, and only dependent on local information. In the case of wireless networks, we provide a MaxWeight-like algorithm with dynamic flow splitting, which is shown to be throughput-optimal

The Behavior of Epidemics under Bounded Susceptibility

We investigate the sensitivity of epidemic behavior to a bounded susceptibility constraint -- susceptible nodes are infected by their neighbors via the regular SI/SIS dynamics, but subject to a cap on the infection rate. Such a constraint is motivated by modern social networks, wherein messages are broadcast to all neighbors, but attention spans are limited. Bounded susceptibility also arises in distributed computing applications with download bandwidth constraints, and in human epidemics under quarantine policies. Network epidemics have been extensively studied in literature; prior work characterizes the graph structures required to ensure fast spreading under the SI dynamics, and long lifetime under the SIS dynamics. In particular, these conditions turn out to be meaningful for two classes of networks of practical relevance -- dense, uniform (i.e., clique-like) graphs, and sparse, structured (i.e., star-like) graphs. We show that bounded susceptibility has a surprising impact on epidemic behavior in these graph families. For the SI dynamics, bounded susceptibility has no effect on star-like networks, but dramatically alters the spreading time in clique-like networks. In contrast, for the SIS dynamics, clique-like networks are unaffected, but star-like networks exhibit a sharp change in extinction times under bounded susceptibility. Our findings are useful for the design of disease-resistant networks and infrastructure networks. More generally, they show that results for existing epidemic models are sensitive to modeling assumptions in non-intuitive ways, and suggest caution in directly using these as guidelines for real systems

Epidemic Thresholds with External Agents

We study the effect of external infection sources on phase transitions in epidemic processes. In particular, we consider an epidemic spreading on a network via the SIS/SIR dynamics, which in addition is aided by external agents - sources unconstrained by the graph, but possessing a limited infection rate or virulence. Such a model captures many existing models of externally aided epidemics, and finds use in many settings - epidemiology, marketing and advertising, network robustness, etc. We provide a detailed characterization of the impact of external agents on epidemic thresholds. In particular, for the SIS model, we show that any external infection strategy with constant virulence either fails to significantly affect the lifetime of an epidemic, or at best, sustains the epidemic for a lifetime which is polynomial in the number of nodes. On the other hand, a random external-infection strategy, with rate increasing linearly in the number of infected nodes, succeeds under some conditions to sustain an exponential epidemic lifetime. We obtain similar sharp thresholds for the SIR model, and discuss the relevance of our results in a variety of settings.Comment: 12 pages, 2 figures (to appear in INFOCOM 2014

Relationship Banking, State Co-Ordination and Long-Term Debt: Reinterpreting the Big Push

We develop a lending game in which relationship-specific investments by firms benefit banks and vice versa. We show that even if all firms and banks prefer high-tech relationship loans under the first-best, asymmetric information and investment non-contractibility make them choose low-tech transaction loans. However, governments with intermediate risk ratings can use Groves subsidies for a concerted switch to long-term relationship loans. To avoid premature liquidation, they finance the scheme with long-term foreign debt. Thus, we try to explain the positive correlation between subsidies and long-term domestic and foreign debt, which was a salient feature of the East Asian development experience.Relationship Banking; Groves Subsidies; Intermediate Rating; Long-term Debt

Mass-Transport Models with Fragmentation and Aggregation

We present a review of nonequilibrium phase transitions in mass-transport models with kinetic processes like fragmentation, diffusion, aggregation, etc. These models have been used extensively to study a wide range of physical problems. We provide a detailed discussion of the analytical and numerical techniques used to study mass-transport phenomena.Comment: 29 pages, 4 figure