Match Making and Long Term Relationships in Financial Markets / The method of Analysis and the development of Cognitive Skills: implications for the educational system and the job market

Lun, 07/03/2022 - 13:00 / 14:00

403, Viale Romania

Speaker: Debarya Jana , Riccardo Manghi , Luiss

 

Speaker: Debarya Jana

Title: Match Making and Long Term Relationships in Financial Markets

Abstract:

How are relationships formed and what determines the length of the relationships in the financial market? Is early exit a possibility? How can we explain run on funds or investor runs phenomenon and redemption? How do alternate or outside options influence these relationship formations? This paper builds a model where participants of the financial market match and form long-term (or short-term) relationships. The objective of this paper is to explain how the investor and investee match in the market and decide on the length of the relationship over time through a relationship game embedded in a search market equilibrium with search frictions and market thickness. The answer to these questions on how matches are formed and development of long term relationships lies on the access to private information of the participants and match quality along with avalaible outside options available to both sides of the market.

 

Speaker: Riccardo Manghi

Title: The method of Analysis and the development of Cognitive Skills: implications for the educational system and the job market

Abstract:

In this work I analyze the role of two different learning processes - Analysis and Synthesis - which translate into the development of two different types of skills, i.e. Cognitive and Applied Skills. By changing the learning methodologies in the school system,  the government is able to rebalance the initial multimensional skill vector of the individuals. First I run a randomized control trial to assess the impact of a variation in the amount of  Analysis implemented in education on the skills development. After showing that the method of Analysis favours the development of cognitive skill, I propose an equation for the skills dynamic during education.The functional form of the equations is chosen according to the findings from the empirical literature in cognitive/learning psychology, while the parameters are calibrated using the RCT data. The equations are then applied to a job search model in which individuals first update their initial skill vector in the educational period, and then enter in the job market. While entering in the job market they are randomly matched with firms and adjust their skills  adapting to  the  skill requirements  of  the firm  matched. The government chooses the balance between the two methodologies- thus it can rebalance the initial skill vector- in order to maximize the aggregate match value in the job market. The optimal solution of the model is characterized by a rebalance of the initial skill vector more towards the cognitive skill respect to the one currently implemented, measured in the empirical part,as it allows to increase the aggregate match value favouring the speed of skill adjustment, thus the flexibility and the mobility in the job market.