Who Should Pay for Interdependent Risk? Policy Implications for Security Interdependence Among Airports

We study interdependent risks in security, and shed light on the economic and policy implications of increasing security interdependence in presence of reactive attackers. We investigate the impact of potential public policy arrangements on the security of a group of interdependent organizations, namely, airports. Focusing on security expenditures and costs to society, as assessed by a social planner, to individual airports and to attackers, we first develop a game-theoretic framework, and derive explicit Nash equilibrium and socially optimal solutions in the airports network. We then conduct numerical experiments mirroring real-world cyber scenarios, to assess how a change in interdependence impact the airports' security expenditures, the overall expected costs to society, and the fairness of security financing. Our study provides insights on the economic and policy implications for the United States, Europe, and Asia.     

Missing data and forecasting in multivariate time series: An application of the common components dynamic linear model

Summary The paper deals with missing data and forecasting problems in multivariate time series making use of the Common Components Dynamic Linear Model (DLMCC), presented in Quintana (1985), and West and Harrison (1989). Some results are presented and discussed: exploiting the correlation between series, estimated by the DLMCC, the paper shows as it is possible to update state vector posterior distributions for the unobserved series. This is realized on the base of the updating of the observed series state vectors, for which the usual Kalman filter equations can be applied. An application concerning some Italian private consumption series provides an example of the model capabilities.     

The evaluation of DNA evidence in pedigrees requiring population inference

Summary. The evaluation of nuclear DNA evidence for identification purposes is performed here taking account of the uncertainty about population parameters. Graphical models are used to detail the hypotheses being debated in a trial with the aim of obtaining a directed acyclic graph. Graphs also clarify the set of evidence that contributes to population inferences and they also describe the conditional independence structure of DNA evidence. Numerical illustrations are provided by re-examining three case-studies taken from the literature. Our calculations of the weight of evidence differ from those given by the authors of case-studies in that they reveal more conservative values.     

The Evolution of Knowledge and the Dynamics of an Industry Network

The paper moves a step forward in the direction of establishing a connection between the structure and evolution of knowledge bases and the structure and evolution of organizational forms in innovative activities in a science-intensive industry. The paper has an explicit focus on the dynamics of the network of collaborative agreements in R&D in the pharma/biotech industry after the “molecular biology revolution”. Using a comprehensive dataset, built by the authors integrating several sources in the industry, the dynamics of the network over time is extensively analyzed. With regards to network structure, it is found that, while the size of the network increases over time due to net flows of entry, its topological properties remain relatively unchanged. The evolution of the network has occurred without relevant deformations in the core-periphery profile. With regards to age-dependent propensity to collaborate, the paper finds that the extent of inter-generational collaboration is much more significant than intra-generational collaboration. In addition, the propensity of firms of a given generation to enter into collaboration with firms of a different generation increases with the distance between the two, while the total number of intra-generational collaborations decreases over time and, moreover, tends to decrease for most recent generations. In the paper a unitary and coherent explanation of the evidence is developed, coming to reveal the existence of a striking isomorphism between structural properties of the dynamics of knowledge and of the evolution of network structure. This revised version was published online in July 2006 with corrections to the Cover Date.     

Online Social Networks and Trust

Social Indicators Research - We use Italian data from the Multipurpose Household Survey to explore how participation in social networking sites (SNS) such as Facebook and Twitter affects the most...     

See you on Facebook! A framework for analyzing the role of computer-mediated interaction in the evolution of social capital

Empirical studies have documented a decline in indicators of social participation in the last five decades. The responsibility of social disengagement has often been attributed to pervasive busyness and the increasing pressure on time. In this paper we argue that computer-mediated interaction, and particularly online networking, can help mitigate this downward trend. We develop a logical framework for assessing the role of the Internet in the evolution of social participation. We analyze an economy where agents can develop their social interactions through two main modes of participation, one encompassing both online networking and face to face interactions, and the other solely based on physical encounters. We study the interdependence between the increase in the pressure on time and the variation in the relative performance of the two strategies of participation.     

The demand for job protection: Some clues from behavioural economics

Radical differences in labour market regulations among countries that in other institutional respects are quite similar are still surprisingly frequent. Nonetheless, traditional theoretical analysis meets enormous difficulties in explaining these differences. The scope of our paper is to show that some clues from behavioural economics could be used to better theoretically treat this problem. Our argument is that workers are different, due to the effects of both culture and education. In particular, building on empirical evidence, we argue that loss aversion and hedonic adaptation are culturally-determined and country-specific aptitudes and that they may help explaining why workers, either employed or unemployed, ask for job protection and are willing to pay the cost of it. The main conclusion of our analysis is that, for poorly educated workers sharing a fatalist view of life, job protection can be more effective than public social expenditure. As a consequence, we suggest that countries with a poorly educated and fatalist workforce will be more prone to offer protection through job protection rather than public social expenditure, which is exactly what the empirical evidence shows.     

The Ex-Ante Evaluation of Achieving Sustainable Development Goals

This paper describes the methodology and main results from an overall assessment on future achievement of sustainable development goals. The proposed approach consists of a model-based, looking forward composite sustainable development index—FEEM sustainability index—projected to the future. It represents a first experiment to reproduce the future dynamics of sustainable development indicators over time and worldwide and to assess future sustainability under different scenarios. The assessment presented here is relevant under different viewpoints. First, it has a very broad nature in terms of both geographical coverage and meaningfulness: it considers the multi-dimensional structure of sustainable development by combining relevant indicators belonging to economic, social and environmental pillars for the whole world. Second, the modelling framework to compute future trends of indicators relies upon a recursive-dynamic computable general equilibrium model. This is an ideal tool to look simultaneously at the development of many indicators, their potential interactions and trade-offs, and more in general to the consequences of economic development and/or policies aiming to increase performance in one or more indicators; it allows measuring the overall sustainability under alternative scenarios, across countries and over time. Finally, regarding the construction of the composite indicator, the application of fuzzy measures and Choquet integral increases substantially the model capability allowing taking into account the interactions that exist among the three main pillars of sustainability and the considered indicators.     

Minority and majority private equity investments: firm performance and governance

This paper adds to the literature on the determinants of the effects of private equity (PE) investments. Using an original dataset of 191 target firms in Italy, we study the effects on performance and governance of the stakes acquired by the PE investor. We employ a difference-in-differences approach and compare target and control firms sharing similar characteristics and performance in the years preceding the deal. We find that PE investment has a positive effect on profitability, sales, and employment; these effects are larger for minority investments. We argue that this signals effective governance that follows from complementing rather than substituting incumbent managers in minority investments.