HEC Paris

About: HEC Paris is a education organization based out in Jouy-en-Josas, France. It is known for research contribution in the topics: Investment (macroeconomics) & Market liquidity. The organization has 584 authors who have published 2756 publications receiving 104467 citations. The organization is also known as: Ecole des Hautes Etudes Commerciales & HEC School of Management Paris.

Emergence of power laws in online communities: the role of social mechanisms and preferential attachment

Abstract: Online communities bring together individuals with shared interest in joint action or sustained interaction. Power law distributions of user popularity appear ubiquitous in online communities but their formation mechanisms are not well understood. This study tests for the emergence of power law distributions via the mechanisms of preferential attachment, least efforts, direct reciprocity, and indirect reciprocity. Preferential attachment, where new entrants favor connections with already popular participants, is the predominant explanation suggested by prior literature. Yet, the attribution of preferential attachment or any other mechanism as a single unitary reason for the emergence of power law distributions runs contrary to the social nature of online communities and does not account for diversity of participants' motivation. Agent-based modeling is used to test if a single social mechanism alone or multiple mechanisms together can generate power law distributions observed in online communities. Data from 28 online communities is used to calibrate, validate, and analyze the simulation. Simulated communication networks are randomly generated according to parameters for each hypothesis. The fit of the power law distribution in the model testing subset is then compared against the fit for these simulated networks. The major finding is that, in contrast to research in more general network settings, neither preferential attachment nor any other single mechanism alone generates a power law distribution. Instead, a blended model of preferential attachment with other social network formation mechanisms was most consistent with power law distributions seen in online communities. This suggests the need to move away from stylized explanations of network emergence that rely on single theories toward more highly socialized and multitheoretic explanations of community development.

Explore First, Exploit Next: The True Shape of Regret in Bandit Problems

Abstract: We revisit lower bounds on the regret in the case of multi-armed bandit problems. We obtain non-asymptotic, distribution-dependent bounds and provide straightforward proofs based only on well-known properties of Kullback-Leibler divergences. These bounds show in particular that in an initial phase the regret grows almost linearly, and that the well-known logarithmic growth of the regret only holds in a final phase. The proof techniques come to the essence of the information-theoretic arguments used and they are deprived of all unnecessary complications.

What Determines Expected International Asset Returns

Abstract: This paper characterizes the forces that determine time-variation in expected international asset returns. We offer a number of innovations. By using the latent factor technique, we do not have to prespecify the sources of risk. We solve for the latent premiums and characterize their time-variation. We find evidence that the first factor premium resembles the expected return on the world market portfolio. However, the inclusion of this premium alone is not sufficient to explain the conditional variation in the returns. We find evidence of a second factor premium which is related to foreign exchange risk. Our sample includes new data on both international industry portfolios and international fixed income portfolios. We find that the two latent factor model performs better in explaining the conditional variation in asset returns than a prespecified two factor model. Finally, we show that differences in the risk loadings are important in accounting for the cross-sectional variation in the international returns.