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Record W2088967736 · doi:10.1080/14697681003785934

Dynamic liquidation under market impact

2010· article· en· W2088967736 on OpenAlex

Why this work is in the frame

A frame that forgets how it found something cannot be audited. These are the routes that admitted this work.

affAt least one author lists a Canadian institution in the pinned OpenAlex snapshot.

Bibliographic record

VenueQuantitative Finance · 2010
Typearticle
Languageen
FieldEconomics, Econometrics and Finance
TopicStochastic processes and financial applications
Canadian institutionsUniversity of Waterloo
Fundersnot available
KeywordsTransaction costUtility maximization problemMarket impactStochastic controlPortfolioMathematical optimizationOptimal controlTrading strategyGeometric Brownian motionQuadratic equationComputer scienceEconomicsEconometricsMathematicsMathematical economicsMicroeconomicsMarket microstructureUtility maximizationFinance

Abstract

fetched live from OpenAlex

The optimal liquidation problem with transaction costs, which includes a positive fixed cost, and market impact costs, is studied in this paper as a constrained stochastic optimal control problem. We assume that trading is instantaneous and the dynamics of the stock to be liquidated follows a geometric Brownian motion. The solution to the impulse control problem is computed at each time step by solving a linear partial differential equation and a maximization problem. In contrast to results obtained from the static formulation of Almgren and Chriss [J. Risk, 2000 Almgren, R and Chriss, N. 2000. Optimal execution of portfolio transactions. J. Risk, 3: 5–39. [Crossref] , [Google Scholar], 3, 5–39], when risk is not considered, the optimal liquidation strategy from our stochastic control formulation depends on temporary market impact cost and permanent market impact cost parameters. In addition, our computational results indicate the following properties of the optimal execution strategy from the stochastic control formulation. Due to the existence of a no-transaction region, it may not be optimal for some individuals to sell their assets on some trading dates. As the value of the permanent market impact parameter increases, the expected optimal amount liquidated at the terminal time increases. As the value of the quadratic temporary impact cost parameter increases, the expected optimal amount liquidated at trading times tends to be uniform, and the no-transaction region shrinks. In the presence of quadratic temporary market impact costs, in contrast to optimal strategies that result from fixed and/or proportional transaction costs alone, portfolios in the selling region are neither re-balanced into the no-transaction region nor into the sell and no-transaction interface.

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Full frame distilled prediction

Teacher imitation

Not calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.

metaresearch head score (Codex)0.000
metaresearch head score (Gemma)0.000
Version: codex-gemma-dda1882f352aValidation status: machine_predicted_unvalidated
Candidate categoriesInsufficient payload (model declined to judge)
Consensus categoriesnone
DomainCandidate signal: none · Consensus signal: none
Study designCandidate signal: Theoretical or conceptual · Consensus signal: Theoretical or conceptual
GenreCandidate signal: Empirical · Consensus signal: none
Teacher disagreement score0.741
Threshold uncertainty score1.000

Codex and Gemma teacher scores by category

CategoryCodexGemma
Metaresearch0.0000.000
Meta-epidemiology (narrow)0.0000.000
Meta-epidemiology (broad)0.0000.000
Bibliometrics0.0000.000
Science and technology studies0.0000.000
Scholarly communication0.0000.000
Open science0.0000.000
Research integrity0.0000.000
Insufficient payload (model declined to judge)0.0000.001

Machine scores (provisional)

The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.

Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.

Opus teacher head0.025
GPT teacher head0.291
Teacher spread0.266 · how far apart the two teachers sit on this one work
Validation statusscore_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from it