Natural Selection, Irrationality and Monopolistic Competition

This paper builds an evolutionary model of an industry where firms produce differentiated products. Firms have different average cost functions and different demand functions. Firms are assumed to be totally irrational in the sense that firms enter the industry regardless of the existence of profits; firms' outputs are randomly determined rather than generated from profit maximization problems; and firms exit the industry if their wealth is negative. It shows that without purposive profit maximization assumption, monopolistic competition still evolves in the long run. The only long run survivors are those that possess the most efficient technology, face the most favorable market conditions and produce at their profit maximizing outputs. This paper modifies and supports the classic argument for the derivation of monopolistic competition.Evolution, Natural Selection, Irrationality, Monopolistic Competition, Survival of the Fittest, Market Rationality

On the Survival of Overconfident Traders in a Competitive Securities Market

Recent research has proposed several ways in which overconfident traders can persist in competition with rational traders. This paper offers an additional reason: overconfident traders do better than purely rational traders at exploiting mispricing caused by liquidity or noise traders. We examine both the static profitability of overconfident versus rational trading strategies, and the dynamic evolution of a population of overconfident, rational and noise traders. Replication of overconfident and rational types is assumed to be increasing in the recent profitability of their strategies. The main result is that the long-run steady-state equilibrium always involves overconfident traders as a substantial positive fraction of the population.Survivorship, Natural Selection, Overconfident Traders, Noise traders

Evolutionary Models Of Market Behavior

This thesis consists of three evolutionary models examining market behavior.;Profit maximization is the usual prerequisite for achievement of competition. However, for a long time it has been thought that this principle of profit maximization can be replaced by natural selection. In an evolutionary model of an industry, where firms\u27 outputs are chosen randomly, where entry occurs with no motivation and where exit occurs when a firm\u27s wealth becomes negative, the first paper shows that the industry converges in probability to a perfectly competitive equilibrium as firms get infinitesimally small relative to the market, as the entry fixed costs get sufficiently small and as time gets sufficiently large.;The second paper shows that informational efficiency can be achieved in the long run when all speculators are irrational noise traders. Speculators are assumed to be unsophisticated and merely act upon their predetermined trading types (buyer, seller, or both), their predetermined fractions of wealth allocated for speculation and their inherent abilities to predict the spot price, reflected in their distributions of prediction errors with respect to the spot price. In a dynamic model of a futures market, speculators with a continuous spectrum of all possible predictive abilities are followed through time. With continuous entry of such speculators into the economy the market redistributes wealth among speculators. This paper shows that the futures price converges in probability to the spot price.;The third paper uses an evolutionary approach to explain the origin of money as a medium of exchange in a primitive economy, where agents specialize in production for the purpose of trading for their own consumption goods. Agents meet randomly in pairs and trade bilaterally. All agents are assumed to begin with arbitrary trading strategies. A general class of dynamics, which is consistent with Darwinian dynamics, is applied to the selection of strategies. This paper finds that which commodities serve as media of exchange depends on the relative intrinsic values among all commodities, the proportions of agents specializing in different production consumption activities and the agents\u27 initial trading strategies. In addition, this paper shows that this class of dynamics only selects for the locally optimal equilibrium and it does not necessarily select for a global optimum

Accounting Conservatism, Market Liquidity and Informativeness of Asset Price: Implications on Mark to Market Accounting

Abstract This paper theoretically examines the impact of conservatism on the asset price in an asset market allowing for strategic interactions among traders. Due to the trades coming from conservatism traders contain less informational content, the asset price is shown to be less informative in the presence of conservatism traders. In addition, this paper shows that the market liquidity increases as the proportion of conservatism traders increases. With mark to market accounting replacing the conservative accounting practice, the asset price will be more informative and the market liquidity will be reduced. From the perspective of the informativeness of the asset price, the results of this paper support mark to market accounting. JEL classification numbers: G14, G12, M4

Natural Selection, Irrationality and Monopolistic Competition

This paper builds an evolutionary model of an industry where firms produce differentiated products. Firms have different average cost functions and different demand functions. Firms are assumed to be totally irrational in the sense that firms enter the industry regardless of the existence of profits; firms' outputs are randomly determined rather than generated from profit maximization problems; and firms exit the industry if their wealth is negative. It shows that without purposive profit maximization assumption, monopolistic competition still evolves in the long run. The only long run survivors are those that possess the most efficient technology, face the most favorable market conditions and produce at their profit maximizing outputs. This paper modifies and supports the classic argument for the derivation of monopolistic competition

Significance of PRO2000/ANCCA expression, a novel proliferation-associated protein in hepatocellular carcinoma

BACKGROUND: PRO2000/ANCCA may be an important candidate gene which located within a region of chromosome 8q in hepatocellular carcinoma (HCC). However, its significance remains unclear. The aim of this study was to explore the clinical significance of PRO2000/ANCCA expression in HCC. METHODS: The correlations of PRO2000/ANCCA expression with clinicopathological factors and prognosis of HCC patients were analyzed. Expression of PRO2000/ANCCA, ki-67, cyclinD1, p53 and p21 was detected in HCCs from 107 patients along with corresponding non-tumor tissues by immunohistochemistry. RESULTS: PRO2000/ANCCA expression was present in 66 of 107 (64.94%) HCC specimens in which 36 of 76 (47.37%) in well differentiated tumors and 30 of 31 (96.77%) in poorly differentiated tumors respectively, while 8 (7.48%) in adjacent non-tumor tissues with scattered positive cells. PRO2000/ANCCA expression was associated with clinicopathological features such as histological differentiation, number of tumor nodules, TNM stage, tumor microsatellite, portal vein tumor thrombus and recurrence, but not with gender, age, tumor size, cirrhosis, HBV infection and serum fetoprotein (AFP) level. There was a close relationship between PRO2000/ANCCA and ki-67 and cyclinD1 in HCC. PRO2000/ANCCA immunopositivity was independent of p53 and p21(WAF1/Cip1). CONCLUSIONS: Increased expression of PRO2000/ANCCA is associated with adverse outcome in patients with HCC and is a predictor of poor prognosis for HCC. PRO2000/ANCCA may be involved in the development of HCC and might promote cell proliferation through a p53/ P21(WAF1/Cip1)-independent pathway

On the Survival of Overconfident Traders in a Competitive Securities Market

Recent research has proposed several ways in which overconfident traders can persist in competition with rational traders. This paper offers an additional reason: overconfident traders do better than purely rational traders at exploiting mispricing caused by liquidity or noise traders. We examine both the static profitability of overconfident versus rational trading strategies, and the dynamic evolution of a population of overconfident, rational and noise traders. Replication of overconfident and rational types is assumed to be increasing in the recent profitability of their strategies. The main result is that the long-run steady-state equilibrium always involves overconfident traders as a substantial positive fraction of the population