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We survey extant literature on the economics of blockchain fundamentals, with particular focus on Bitcoin, proof-of-work, and proof-of-stake. We formally clarify Bitcoin's economic significance in solving the double-spending problem without a centralized entity. We then transition to the economics literature, highlighting the key endogenous economic interactions among participants in the Bitcoin ecosystem as well as the economics of proof-of-stake and other potential consensus algorithms. Along the way, we discuss various literature that provides important insights regarding fees, forks, and price volatility. We conclude by reflecting on the next generation of blockchain innovations.

This article provides a critical appraisal of the March 2020 crisis in fixed income markets. We synthesize the main events, characterize what appears to be an emerging consensus on what caused the market breakdowns, summarize how the Federal Reserve's actions contributed to its resolution, and discuss potential lasting effects of the crisis. This review makes clearer the fragilities and interconnectedness that characterize the current fixed income market structure and their effects on liquidity provision. We argue that the current market structure, combined with the continued growth of Treasury markets, corporate and municipal bond markets, and particularly, mutual funds, raises the specter that periodic instability may remain a feature of fixed income markets. Expected final online publication date for the Annual Review of Financial Economics, Volume 15 is November 2023. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

We develop a model of psychological-games-played-on-a-network to demonstrate a role for endogenously determined, rationally chosen ethics. Our analysis produces sharp results about contagion of nonethical or ethical behavior and the possible equilibrium configurations of each type of behavior. We find, and quantify, critical densities for clusters of each type of behavior that determine everything about contagion. We introduce society as a third player to investigate ethical failures as externalities. We use these results to show how regulations and network structure can affect whether clusters of ethical behavior can survive and how large they can be in a financial market setting.

We examine the microstructure of liquidity provision in the COVID-19 corporate bond liquidity crisis. During the two weeks leading up to Federal Reserve System interventions, volume shifted to liquid securities, transaction costs soared, trade-size pricing inverted, and dealers, particularly non-primary dealers, shifted from buying to selling, causing dealers’ inventories to plummet. Liquidity provisions in electronic customer-to-customer trading increased, though at prohibitively high costs. By improving dealer funding conditions and providing a liquidity backstop, the Primary Dealer Credit Facility and the Secondary Market Corporate Credit Facility (SMCCF) stabilized trading conditions. Most of the impact of SMCCF on bond liquidity seems to have materialized following its announcement. We argue that the Federal Reserve's actions reflect a new role as market maker of last resort.

We investigate the new reality of exchange-traded funds (ETFs). We show that most ETFs are active investments in form (designed to generate alpha) or function (serve as building blocks of active portfolios). We define a new activeness index to capture these dimensions, finding that the cross-section of ETFs is now increasingly characterized by highly active investment vehicles. Active-in-form ETFs have positive flow-performance sensitivity, charge the highest fees among ETFs, and have high within-portfolio turnover. Active-in-function ETFs have more concentrated holdings, less within-portfolio turnover, but higher turnover in the secondary market. We show how more active ETFs are gaining market share over less active ETFs, leading to competitive fee pressure both within the ETF space and across the investment management industry. We suggest that the growing activeness of ETFs may assuage concerns about ETFs harming price discovery.

Technology transformed the trading of financial assets but has been slower to come to corporate bond trading. Combining proprietary data from MarketAxess with regulatory TRACE data, we investigate how electronic request for quote (RFQ) trading affects bond dealers and trading more generally. We demonstrate that electronic trading remains fairly small and segmented, but has wide-ranging effects on transaction costs and execution quality in both electronic and voice trading, and the interdealer market. We identify features particular to bond markets that have and could continue to limit electronic bond trading growth. We provide an intriguing portrait of a market in transition.

This article, based on a talk given to The First International Online Seminar on the Person-Centred Approach, October 10–11, 2021, has three main aims. Firstly, to remind us of Rogers’ indefatigable commitment to cultural transformation, humanisation, and peace. I suggest that these are defining aspects of the origin story of the person-centred approach (PCA), which in recent decades has retreated from this focus in favour of increased attention to person-centred and experiential psychotherapies as methods of psychotherapy and counselling. Secondly, I describe how this cultural transformation project is still at work in the 21st century, showing up in a wide range of transformative initiatives which extend the basic ideas embedded in a person-centred philosophy into what some identify as an emerging counterculture. Thirdly, I urge the PCA community to revisit and re-engage the social transformation agenda at the heart of the approach, to collaborate and organise ‘academies of hope’, and to become advocates and activists for the creation of life-centred cultures before it is too late.

Those who engage in pseudoscience want it both ways. They want the authority of science but are unwilling to abide by the rules by which the scientific community earned its authority in the first place

We empirically examine the impact of industry exchange-traded funds (IETFs) on informed trading and market efficiency. We find that IETF short interest spikes simultaneously with hedge fund holdings on the member stock before positive earnings surprises, reflecting long-the-stock/short-the-ETF activity. This pattern is stronger among stocks with high industry risk exposure. A difference-in-difference analysis on the ETF inception event shows that IETFs reduce post-earnings-announcement drift more among stocks with high industry risk exposure, suggesting that IETFs improve market efficiency. We also find that the short interest ratio of IETFs positively predicts IETF returns, consistent with the hedging role of IETFs.

Understanding modern market microstructure phenomena requires large amounts of data and advanced mathematical tools. We demonstrate how machine learning can be applied to microstructural research. We find that microstructure measures continue to provide insights into the price process in current complex markets. Some microstructure features with high explanatory power exhibit low predictive power, while others with less explanatory power have more predictive power. We find that some microstructure-based measures are useful for out-of-sample prediction of various market statistics, leading to questions about market efficiency. We also show how microstructure measures can have important cross-asset effects. Our results are derived using 87 liquid futures contracts across all asset classes.

We investigate the role that transaction fees play in the bitcoin blockchain's evolution from a mining-based structure to a market-based ecology. We develop a game-theoretic model to explain the factors leading to the emergence of transactions fees, as well as to explain the strategic behavior of miners and users. Our model highlights the role played by mining rewards, transaction fees, price, and waiting time, discusses welfare issues, and examines how microstructure features such as exogenous structural constraints influence the dynamics of user participation on the blockchain. We provide empirical evidence on the model's predictions and discuss implications for bitcoin's evolution.

In 1973 Carl R. Rogers, Natalie Rogers Fuchs and John K Wood and a staff that included the current author collectively conceived of a series of events that would explore three core questions–whethe...

In the turbulent times of the 1960s and 1970s in Europe and the US a cultural upheaval of predominantly young people challenged the structures, habits and institutions that underpinned the Modern i...

This article examines information leakage when trading in distributed ledgers. We show how the lack of time priority in the period between the publication of a transaction and its validation by miners or designated participants can expose a transaction’s footprint to the market, resulting in potential front-running and manipulation. We propose a cryptographic approach for solving information leakage problems in distributed ledgers that relies on using a hash (or fingerprint) to secure time priority, followed by a second communication that reveals more features of the underlying market transaction—in effect using a transaction’s fingerprint to hide its footprint. Solving the information leakage problem greatly expands the potential applications of private distributed ledger technology to include trading.

Summary: Rapid and accurate diagnosis of meningitis/encephalitis (M/E) is essential for successful patient outcomes. The FilmArray® meningitis/encephalitis Panel (MEP) is a multiplexed PCR test for simultaneous, rapid detection of pathogens directly from cerebrospinal fluid (CSF) samples. 94 prospectively collected CSF specimens from patients with clinical suspicion of infective M/E underwent testing for 14 pathogens simultaneously, including Escherichia coli, Haemophilus influenzae, Neisseria meningitidis, and Varicella zoster. MEP demonstrated 95% agreement with current PCR methods, resulting in 16 diagnosed cases of M/E. Typically, the FilmArray® MEP results were delivered within approximately one hour, contrasting with current practices taking up to 5.6 days. Given the significant morbidity and mortality associated with delayed diagnosis of central nervous system infections, the FilmArray® MEP is a useful addition to the diagnostic capabilities of a clinical microbiology department. Keywords: Multiplex PCR, Meningitis/encephalitis, Diagnosis, Reduced time, Improved patient outcome, Economic benefit

Against the backdrop of COVID-19, we study how the interactions of mutual funds and dealers introduce fragility to the municipal bond market and carry lasting impacts. During the crisis, trading activities surge while dealers' liquidity provision plunges for mutual-fund-held bonds, leading to greater price depressions in these bonds. Importantly, the crisis reshapes the market's perceptions of mutual fund fragility risks. In the aftermath, yield spreads widen significantly more for bonds with greater mutual fund exposures. Such post-crisis pricing effects reflect dealers' continued reluctance to provide liquidity for mutual-fund-held bonds and they are stronger for bonds whose mutual fund holders are more susceptible to investor runs.

The arrival of new information is a source of systematic risk for the holder of a financial security. Using several measures of information flows, we show that a stock’s sensitivity to market-wide information flow is associated with a robust cross-sectional return premium that is distinct from other return premia. We find that the amount of information impounded in prices through trading has increased in recent years consistent with declining trading costs and the rise of algorithmic trading. Consequently, the information flows risk premium is increasing through time.

Les contextes culturels dans lesquels nous vivons et qui nous servent de reference ne sont plus stables et sont perturbes a une echelle inegalee. Cela entraine une rupture entre les esprits humains et les contextes exterieurs dans lesquels ils sont plonges. Il y a trois reponses possibles a cette crise de coherence psychologique : reactive, psychotique ou transformative. Carl Rogers a identifie les caracteristiques des personnes capables de repondre de maniere transformationnelle. Il a montre l’emergence d’un nouveau mode de conscience et de competences psychologiques nouvelles. L’Approche centree sur la personne n’est pas simplement une approche therapeutique efficace, mais aussi une puissante pedagogie qui soutient l’apprentissage transformationnel necessaire pour forger les personnes de demain. Il est temps aujourd’hui de replacer la mission et le but de la theorie et de la pratique centrees sur la personne, et de les etendre au-dela du contexte de la therapie individuelle dans des spheres sociales et civiques plus larges.

This article suggests that the policy re-framing of the prostitution of children as a separate phenomenon from the prostitution of adults is obscuring the commercial nexus between men who buy sex with children and the third party profiteers (pimps) who frequently supply the children they buy. It suggests that this is making both groups of perpetrators invisible. It argues that coercion is endemic to the sex trade and explores the gendered strategies of coercive control used by pimps to entrap both children and women. The article suggests that the wider sex trade creates a ‘conducive context’ for the sexual commodification of children, and that the commercial sexual exploitation of children and adults can only be effectively challenged by policy and law aimed at reducing demand for all forms of prostitution. It focusses on law and policy in England and Wales, which differs from the rest of the UK.

Blockchain-based cryptocurrencies prioritize transactions based on their fees, creating a unique kind of fee market. Empirically, this market has failed to yield stable equilibria with predictable prices for desired levels of service. We argue that this is due to the absence of a dominant strategy equilibrium in the current fee mechanism. We propose an alternative fee setting mechanism that is inspired by generalized second price auctions. The design of such a mechanism is challenging because miners can use any criteria for including transactions and can manipulate the results of the auction after seeing the proposed fees. Nonetheless, we show that our proposed protocol is free from manipulation as the number of users increases. We further show that, for a large number of users and miners, the gain from manipulation is small for all parties. This results in users proposing fees that represent their true utility and lower variance of revenue for miners. Historical analysis shows that Bitcoin users could have saved $272,528,000 USD in transaction fees while miners could have reduced the variance of fee income by an average factor of 7.4 times.

This paper examines how the relative tick size influences market liquidity and the biodiversity of trader interactions. Using unique NYSE order-level data, we find that a larger relative tick size benefits High-Frequency Trading (HFT) firms that make markets on the NYSE: they leave orders in the book longer, trade more aggressively, and have higher profit margins. The effects of a larger relative tick size on the market are more complex. In a one-tick spread environment, a larger relative tick size results in greater depth and more volume; in a multi-tick environment, the opposite outcome prevails. The negative impact on depth and volume in the multi-tick environment is consistent with greater adverse selection coming from increased undercutting of limit orders by informed HFT market makers. Our work suggests why a one-size-fits-all spread policy is unlikely to be optimal, and we propose an alternative policy.

We investigate the role that transaction fees play in the Bitcoin blockchain’s evolution from a mining-based structure to a market-based ecology. We develop a game-theoretic model to explain the factors leading to the emergence of transactions fees, as well as to explain the strategic behavior of miners and users. Our model also highlights the role played by mining rewards and by volume, and examines how microstructure features such as exogenous structural constraints influence the dynamics and stability of the Bitcoin blockchain. We provide empirical evidence on the predictions of our model and discuss implications for Bitcoin’s evolution.

Rapid detection of patients with carbapenemase-producing Enterobacteriaceae (CPE) is essential for the prevention of nosocomial cross-transmission, allocation of isolation facilities and to protect patient safety. Here, we aimed to design a new laboratory work-flow, utilizing existing laboratory resources, in order to reduce time-to-diagnosis of CPE. A review of the current CPE testing processes and of the literature was performed to identify a real-time commercial polymerase chain reaction (PCR) assay that could facilitate batch testing of CPE clinical specimens, with adequate CPE gene coverage. Stool specimens (210) were collected; CPE-positive inpatients (n = 10) and anonymized community stool specimens (n = 200). Rectal swabs (eSwab™) were inoculated from collected stool specimens and a manual DNA extraction method (QIAamp® DNA Stool Mini Kit) was employed. Extracted DNA was then processed on the Check-Direct CPE® assay. The three step process of making the eSwab™, extracting DNA manually and running the Check-Direct CPE® assay, took

Natalie Rogers, humanistic pioneer, creator of Person Centered Expressive Arts, author, and daughter of Helen and Carl Rogers, passed away October 17, 2015, at her home. She raised three daughters, Naomi, Frances, and Janet. In 1970, she moved to the San Francisco Bay Area to establish herself as a psychotherapist, artist, and feminist activist. Her first book, Emerging Woman, offers a candid and heartfelt description of the transition many women were making at that time, from a life defined by the expectations and needs of others to one that sprang from her own deep interiority. Hers was the voice of a generation of women who grew up in the claustrophobic 1950s who were expected to submerge their own potential in favor of their husbands’. In California she developed her own distinct form of transformative practice combining art with psychotherapy, which she called the creative connection. With her father’s encouragement and participation, she went on to create the Person-centered Expressive Therapy Institute and trained practitioners, worldwide. Her books, Creative Connection and Creative Connection for Groups, describe the process. Natalie was a peace activist, feminist, and teacher. She will be remembered for her contribution to humanistic psychology and her fierce yet graceful efforts on behalf of people oppressed, peace, and the environment.

This chapter discusses vertical and horizontal problems in financial regulation and corporate governance. More specifically, it examines three contexts in which efforts to mitigate systemic risk and moral hazard in capital markets and financial institutions clash with long-standing principles of corporate governance. The first issue relates to the so-called “vertical” challenge between financial institutions and the separately incorporated holding companies that own and control them. The second issue relates to the “horizontal” challenge, in which regulatory arbitrage occurs between the banking subsidiaries of complex holding companies and their less-regulated nonbank and shadow bank siblings. The third and final issue deals with the conflict between the conception of fiduciary duty in the federal law of insider trading and the concept of fiduciary duty in state law.

Using a laboratory market, we investigate how the ability to hide orders affects traders’ strategies and market outcomes in a limit order book environment. We find that order strategies are greatly affected by allowing hidden liquidity, with traders substituting nondisplayed for displayed shares and changing the aggressiveness of their trading. As traders adapt their behavior to the different opacity regimes, however, most aggregate market outcomes (such as liquidity and informational efficiency) are not affected as much. We also find that opacity appears to increase the profits of informed traders but only when their private information is very valuable

© 2015 Elsevier B.V. Markets are different now, transformed by technology and high frequency trading. In this paper, I investigate the implications of these changes for high frequency market microstructure (HFT). I describe the new high frequency world, with a particular focus on how HFT affects the strategies of traders and markets. I discuss some of the gaps that arise when thinking about microstructure research issues in the high frequency world. I suggest that, like everything else in the markets, research must also change to reflect the new realities of the high frequency world. I propose some topics for this new research agenda in high frequency market microstructure.

Maureen O’Hara Where to start to pay tribute to a friend, colleague, and mentor for so many years? The last time I saw John was in the hospital 2 days before he died. My husband Bob and I had just returned from a 5 month stay in France, and I had noticed that the torrent of John’s ALL CAPS e-mails had stopped some weeks before. I hoped and assumed that meant he had decided truly to step back from his breakneck schedule and focus on building new leadership for the Politics of Trust. Seeing him in the hospital told a different story. He was obviously gravely ill. Body failing but spirit intact, he greeted our unannounced visit with a wry smile, a small wave, and an ironic “great timing.” We all knew the visit was the last we would have together. He told us about a new project at de Anza Community College and with neither sentiment nor self-pity acknowledged that he was “checking out.” We felt blessed to have one more chance to express our love, share sweet recollections, and together renew our commitment to the cause of human flourishing.

We show how inter-market information linkages in ETFs can lead to market instability and herding. When underlying assets are hard-to-trade, informed trading may take place in the ETF. Underlying market makers, then, have an incentive to learn from ETF price when setting prices in their respective markets. We demonstrate that this learning is imperfect: market makers pick up information unrelated to asset value along with pertinent information. This leads to propagation of shocks unrelated to fundamentals and causes market instability. Further, if market makers cannot instantaneously synchronize their prices, inter-market learning can lead to herding, where speculators across markets trade in the same direction using similar signals, unhinged from fundamentals.

© 2017 David Easley, Marcos Lopez de Prado, and Maureen O'Hara. Ke and Lin provide a valuable alternative approach to estimating the Volume-Synchronized Probability of Informed Trading (VPIN) measure. As we did with estimation of VPIN's predecessor, PIN, they estimate the parameters underlying their modified VPIN measure. This allows Ke and Lin to extract more information from the available data than we extracted with our direct approximation to VPIN. For markets in which the parameters can be reliably estimated their approach seems both a valuable and viable modification.

This paper examines information leakage in distributed ledgers. We show how the lack of time priority in the period between the publication of a transaction and its validation by miners or designated participants can expose a transaction’s “footprint” to the market, resulting in potential front-running and manipulation. We propose a cryptology-based approach for solving information leakage problems in distributed ledgers that relies on using a “hash” (or mathematical identifier) to secure time-priority followed by a second communication revealing more features of the underlying market transaction. Solving the information leakage problem greatly expands the potential applications of private distributed ledger technology.