Who actually expresses an intent to buy shares of GameStop Corporation (GME) on Reddit? What convinces people to buy stocks? Are people convinced to support a coordinated plan to adversely impact Wall Street investors? Existing literature on understanding intent has mainly relied on surveys and self-reporting; however there are limitations to these methodologies. Hence, in this paper, we develop an annotated dataset of communications centered on the GameStop phenomenon to analyze the subscriber intention behaviors within the r/WallStreetBets community to buy (or not buy) stocks. Likewise, we curate a dataset to better understand how intent interacts with a user's general support towards the coordinated actions of the community for GameStop. Overall, our dataset can provide insight to social scientists on the persuasive power of social movements online by adopting common language and narrative. WARNING: This paper contains offensive language that commonly appears on Reddit's r/WallStreetBets subreddit.
more »
« less
Who should sell stocks?
Never selling stocks is optimal for investors with a long horizon and a realistic range of preference and market parameters, if relative risk aversion, investment opportunities, proportional transaction costs, and dividend yields are constant. Such investors should buy stocks when their portfolio weight is too low and otherwise hold them, letting dividends rebalance to cash over time rather than selling. With capital gains taxes, this policy outperforms both static buy‐and‐hold and dynamic rebalancing strategies that account for transaction costs. Selling stocks becomes optimal if either their target weight is low or intermediate consumption is substantial.
more » « less- NSF-PAR ID:
- 10064894
- Publisher / Repository:
- Wiley-Blackwell
- Date Published:
- Journal Name:
- Mathematical Finance
- Volume:
- 29
- Issue:
- 2
- ISSN:
- 0960-1627
- Page Range / eLocation ID:
- p. 448-482
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
More Like this
-
-
more » « less
Abstract We develop a continuous‐time control approach to optimal trading in a Proof‐of‐Stake (PoS) blockchain, formulated as a consumption‐investment problem that aims to strike the optimal balance between a participant's (or agent's) utility from holding/trading stakes and utility from consumption. We present solutions via dynamic programming and the Hamilton–Jacobi–Bellman (HJB) equations. When the utility functions are linear or convex, we derive close‐form solutions and show that the bang‐bang strategy is optimal (i.e., always buy or sell at full capacity). Furthermore, we bring out the explicit connection between the rate of return in trading/holding stakes and the participant's risk‐adjusted valuation of the stakes. In particular, we show when a participant is risk‐neutral or risk‐seeking, corresponding to the risk‐adjusted valuation being a martingale or a sub‐martingale, the optimal strategy must be to either buy all the time, sell all the time, or first buy then sell, and with both buying and selling executed at full capacity. We also propose a risk‐control version of the consumption‐investment problem; and for a special case, the “stake‐parity” problem, we show a mean‐reverting strategy is optimal.
-
more » « less
Abstract Two risk‐averse litigants with different subjective beliefs negotiate in the shadow of a pending trial. Through contingent contracts, the litigants can mitigate risk and/or speculate on the trial outcome. Contingent contracting decreases the settlement rate and increases the volume and costs of litigation. These contingent contracts mimic the services provided by third‐party investors, including litigation funders and insurance companies. The litigants (weakly) prefer to contract with risk‐neutral third parties when the capital market is transaction‐cost free. However, contracting with third parties further decreases the settlement rate, increases the costs of litigation, and may increase the aggregate cost of risk bearing.
-
more » « less
Abstract We study a situation in which a multi‐feedstock cellulosic biofuel plant can procure stover from productive cropland and switchgrass from marginal land, where growing corn for stover is typically not profitable. We calibrate our model to growing conditions in a promising area of Indiana, USA. We find that cost‐minimizing biorefineries are likely to include switchgrass in the mix of feedstocks despite their high cost of production relative to corn stover. This is because the biorefinery can reduce cost by buying switchgrass grown on marginal land near the plant instead of paying to cover high transportation costs to procure stover from more distant suppliers. Moreover, the share of switchgrass will rise further if the procurement region is constrained by transaction costs or natural barriers. This is because procuring switchgrass can alleviate the cost of paying to induce land conversion to corn to procure additional stover from the intensive margin. Under the assumption that switchgrass is grown on marginal land, inclusion of switchgrass in the feedstock mix not only reduces the cost of producing biofuels but also their carbon footprint without displacing food crops. A key caveat is that high transaction costs of contracting for switchgrass and/or farmers’ reluctance to grow switchgrass on marginal land can severely undermine its inclusion in the feedstock mix. However, these forces may be countervailed by a differential subsidy for biofuels that include a higher share of switchgrass, which would be warranted because of their lower carbon footprint.
-
null (Ed.)The value of cryptocurrencies is highly volatile and investors require fast and reliable exchange systems. In cross-chain transactions, multiple parties exchange assets across multiple blockchains which can be represented as a directed graph with vertexes V as parties and edges E as asset transfers. In a simple form, cross-chain transactions are cross-chain swaps where each edge e transfers an asset that the head of e already owns. However, in general, a cross-chain transaction includes a sequence of exchanges at each blockchain. Further, transactions may have off-chain steps and hence may not be strongly connected. Given a transaction, protocols are desired that guarantee the following property called uniformity. If all parties conform to the protocol, all the assets should be transferred. Further, if any party deviates from the protocol, the conforming parties should not experience any loss. Previous work introduced a uniform protocol for strongly connected cross-chain swaps and showed that no uniform protocol exists for transactions that are not strongly connected. We present a uniform protocol for general cross-chain transactions with sequenced and off-chain steps when a few certain parties are conforming. Further, we prove a new property called end-to-end that guarantees that if the source parties pay, the sink parties are paid. We present a synthesis tool called XCHAIN that given a high-level description of a cross-transaction can automatically generate smart contracts in Solidity for all the parties.more » « less
