Asset Auctions, Information, and Liquidity

A model is presented of a uniform price auction where bidders compete in demand schedules; the model allows for common and private values in the absence of exogenous noise. It is shown how private information yields more market power than the levels seen with full information. Results obtained here are broadly consistent with evidence from asset auctions, may help explain the response of central banks to the crisis, and suggest potential improvements in the auction formats of asset auctions.adverse selection, market power, reverse auctions, bid shading

Competition and Stability in Banking

I review the state of the art of the academic theoretical and empirical literature on the potential trade-off between competition and stability in banking. There are two basic channels through which competition may increase instability: by exacerbating the coordination problem of depositors/investors on the liability side and fostering runs/panics, and by increasing incentives to take risk and raise failure probabilities. The competition-stability trade-off is characterized and the implications of the analysis for regulation and competition policy are derived. It is found that optimal regulation may depend on the intensity of competition.antitrust, regulation, crisis, risk-taking, mergers, state aid, bail-outs

New physics in CP violation experiments

CP violation plays a privileged role in our quest for new physics beyond the electroweak standard model (SM). In the SM the violation of CP in the weak interactions has a single source: the phase of the quark mixing matrix (the CKM matrix, for Cabibbo-Kobayashi-Maskawa). Most extensions of the SM exhibit new sources of CP violation. For instance, the truly minimal supersymmetric extension of the SM (CMSSM) has two new phases in addition to the CKM phase. Given that CP violation is so tiny in the kaon system, is still largely unexplored in B physics and is negligibly small in the electric dipole moments, it is clear that new physics may have a good chance to manifest some departure from the SM in this particularly challenging class of rare phenomena. On the other hand, it is also apparent that CP violation generally represents a major constraint on any attempt at model building beyond the SM. In this review we tackle these two sides of the relation between CP violation and new physics. Our focus will be on the potentialities to use CP violation as a probe on Supersymmetric (SUSY) extensions of the SM. We wish to clarify the extent to which such indirect signals for SUSY are linked to a fundamental theoretical issue: is there a relation between the mechanism that originates the whole flavor structure and the mechanism that is responsible for the breaking of supersymmetry? Different ways to answer this question lead to quite different expectations for CP violation in B physics.Comment: 47 pages, 3 figures. Invited contribution to appear in Annual Reviews of Nuclear and Particle Science Vol. 51, December 200

Endogenous Public Information and Welfare

This paper performs a welfare analysis of economies with private information when public information is endogenously generated and agents can condition on noisy public statistics in the rational expectations tradition. Equilibrium is not (restricted) efficient even when feasible allocations share similar properties to the market context (e.g., linear in information). The reason is that the market in general does not internalize the informational externality when public statistics (e.g., prices) convey information and does not balance optimally non-fundamental volatility and the dispersion of actions. Under strategic substitutability, equilibrium prices will tend to convey too little information when the “informational” role of prices prevails over its “index of scarcity” role and too much information in the opposite case. Under strategic complementarity, prices always convey too little information. The welfare loss at the market solution may be increasing in the precision of private information. These results extend to the internal efficiency benchmark (accounting only for the collective welfare of the active players). Received results—on the relative weights placed by agents on private and public information, when the latter is exogenous—may be overturned.information externality, strategic complementarity and substitutability, asymmetric information, excess volatility, team solution, rational expectations, behavioral traders

Flavor Structure and Supersymmetric CP-Violation

In this talk, we address the possibility of finding supersymmetry through indirect searches in the K and B systems. We prove that, in the absence of the Cabibbo-Kobayashi-Maskawa phase, a general Minimal Supersymmetric Standard Model with all possible phases in the soft-breaking terms, but no new flavor structure beyond the usual Yukawa matrices, can never give a sizeable contribution to $\epsilon_K$, $\epsilon^\prime/\epsilon$ or hadronic B^0 CP asymmetries. However, Minimal Supersymmetric models with additional flavor structures in the soft-supersymmetry breaking terms can produce large deviations from the Standard Model predictions. Hence, observation of supersymmetric contributions to CP asymmetries in B decays would be the first sign of the existence of new flavor structures in the soft-terms and would hint at a non-flavor blind mechanism of supersymmetry breaking.Comment: 15 pages, 3 eps figures. Invited talks given by A. Masiero at the 8th International Symposium on Heavy Flavour Physics (Heavy Flavors 8), Southampton, 25-29 July 1999 and Workshop on Physics and Detectors for DAFNE (Dafne99), Frascati, 16-10 Nov. 199

Random Field Potts model with dipolar-like interactions: hysteresis, avalanches and microstructure

A model for the study of hysteresis and avalanches in a first-order phase transition from a single variant phase to a multivariant phase is presented. The model is based on a modification of the Random Field Potts model with metastable dynamics by adding a dipolar interaction term truncated at nearest neighbors. We focus our study on hysteresis loop properties, on the three-dimensional (3D) microstructure formation and on avalanche statistics.Comment: 11 pages, 16 figure