arXiv subjects

Lin William Cong

Publications and source records attributed to Lin William Cong.

At least 19 recordsLinked to original sources

arXiv2026

From Economic Agents to Agentic Economies: A Systems Blueprint for Economic World Models

Economic World Models (EWMs) are generative economic models that simulate how economies evolve from within by modeling heterogeneous agents, their beliefs and actions, and the market and institutional mechanisms through which their interactions produce aggregate outcomes. This paper develops an implementation roadmap for building economic world models as generative engines in which heterogeneous agents act, interact, adapt, and co-evolve with markets and institutions, thereby producing economic dynamics from the inside. We organize EWM systems into a six-level capability ladder, from fixed rule-based agent worlds to adaptive and LLM-based agent worlds, self-evolving agents, evolving institutional worlds, and sim-to-real economic twins aligned with real observations. A systematic literature survey across these levels reveals that existing work remains concentrated in lower-level agent and simulation environments, while systems with self-evolving agents, endogenous institutions, persistent empirical alignment, and validated economic mechanisms remain rare. By translating the EWM agenda into an implementation blueprint, this paper aims to accelerate the development of the next generation of economic simulation environments that can serve as high-fidelity sandboxes for human decision-makers and as training, planning, evaluation, and safety substrates for AI agents. We release a curated paper list and related resources to support future research.

cs.AI↗

arXiv2026

From PBS to ePBS: the Microstructure of Block Building

Ethereum's Glamsterdam upgrade introduces enshrined proposer-builder separation (ePBS), replacing relay-centric PBS with direct builder bids to proposers. We study how this shift changes the block-building microstructure through a general imperfect-information two-stage auction with verifiable messages, where an early bid serves as both a price offer and a signal. PBS and ePBS are modeled as restrictions of the same block-building game: PBS fixes stopping and disclosure exogenously, while ePBS lets the proposer choose stopping and disclosure ex post. Latency heterogeneity is captured by asymmetric information updates: fast builders observe disclosed early information before rebidding, while slow builders do not. We combine exact perfect Bayesian equilibrium characterizations in tractable cases with calibrated no-regret learning in finite games. For PBS, we show that separating equilibria preserve the standard first-price-auction payoff benchmark and provide conditions for their existence. For ePBS, we demonstrate a ratchet effect: because the proposer can defer block proposal and use early bid information in the second stage, builders anticipate ex-post extraction and shade or pool early bids, generating allocation inefficiency and revenue-efficiency valleys. We interpret this ratchet distortion as a commitment failure. Under full commitment, the optimal policy collapses to the static Myerson auction and removes the ratchet channel. To realize part of this commitment advantage in a feasible mechanism, we propose a Trusted Execution Environment (TEE) sidecar that enforces limited commitment. We formulate the revenue-maximizing TEE mechanism as a bilinear optimization problem. In conservative finite benchmarks, the TEE design increases the proposer revenue relative to the first-price benchmark by approximately $25\%$.

cs.GT↗

arXiv2026

FADE: Mitigating Hallucinations by Reducing Language-Prior Dominance in Large Vision-Language Models

Despite the impressive capabilities of Large Vision-Language Models (LVLMs), they remain susceptible to hallucination, generating content inconsistent with the input image. Recent studies attribute this to the dominance of language priors over visual inputs and employ contrastive decoding methods to mitigate this dominance, but the mechanistic origin remains unexplored. We investigate the information flow through each transformer layer and find that attention modules consistently aggregate visual evidence, while FFN modules at critical layers act as the source of language priors. These priors can override visual evidence, causing correct predictions in intermediate layers to drift toward incorrect outputs. Based on this insight, we propose FADE (FFN Attenuation for DEcoding), a training-free method that attenuates FFN outputs to reduce language-prior dominance. Evaluations on POPE, CHAIR, and MME benchmarks across LLaVA-1.5, mPLUG-Owl2, and InstructBLIP show that FADE effectively mitigates hallucinations while preserving inference efficiency.

cs.AI↗

arXiv2026

TOPS: First-Principles Visual Token Pruning via Constructing Token Optimal Preservation Sets for Efficient MLLM Inference

Multimodal large language models (MLLMs) have achieved strong multimodal reasoning capabilities, but their efficiency is limited by the large number of visual tokens, which introduces substantial computational overhead. Visual token pruning offers a natural solution, yet existing methods are imperfect: attention-based criteria tend to retain redundant tokens, while diversity-based criteria are often agnostic to user instructions. Even methods that combine multiple criteria still lack a principled formulation of the intrinsic objective of token pruning. In this paper, we revisit visual token pruning from a first-principles perspective and formulate it as constructing Token Optimal Preservation Sets. Through a top-down information-theoretic analysis, we identify three fundamental principles for effective token selection: Task Relevance, Information Coverage, and Semantic Diversity. Based on these principles, we propose TOPS, a training-free and model-agnostic pruning module that can be applied to various MLLMs. Extensive experiments on 7 MLLM backbones and 14 benchmarks demonstrate that TOPS outperforms prior methods under diverse pruning settings. Notably, on LLaVA-NeXT, TOPS removes 77.8% of visual tokens while preserving 100.0% and 100.6% performance on its 7B and 13B models, respectively, suggesting that pruning redundant visual tokens can sometimes mitigate hallucination and inspire future lightweight MLLM design.

cs.AI↗

arXiv2026

Privacy Preserving Reinforcement Learning with One-Sided Feedback

We study reinforcement learning (RL) in multi-dimensional continuous state and action spaces with one-sided feedback, where the agent receives partial observations of the state and obtains reward information for only a subset of the state-action space at each time step. This setting introduces substantial challenges in both learning efficiency and privacy preservation. To address these challenges, we propose POOL, a novel privacy-preserving RL algorithm. We conduct a comprehensive theoretical analysis of POOL, deriving a sample complexity bound that matches the known lower bounds for non-private RL. Here, E_rho denotes the privacy parameter, H is the time horizon, and alpha is the optimality-gap parameter. Our findings show that it is possible to enforce strong privacy guarantees while maintaining high learning efficiency, marking a significant step toward practical, privacy-aware RL in multi-dimensional environments with one-sided feedback.

cs.LG↗

arXiv2026

Unlocking the Forecasting Economy: A Suite of Datasets for the Full Lifecycle of Prediction Market: [Experiments \& Analysis]

Prediction markets are markets for trading claims on future events, such as presidential elections, and their prices provide continuously updated signals of collective beliefs. In decentralized platforms such as Polymarket, the market lifecycle spans market creation, token registration, trading, oracle interaction, dispute, and final settlement, yet the corresponding data are fragmented across heterogeneous off-chain and on-chain sources. We present the first continuously maintained dataset suite for the full lifecycle of decentralized prediction markets, built on Polymarket. To address the challenges of large-scale cross-source integration, incomplete linkage, and continuous synchronization, we build a unified relational data system that integrates three canonical layers: market metadata, fill-level trading records, and oracle-resolution events, through identifier resolution, on-chain recovery, and incremental updates. The resulting dataset spans October 2020 to March 2026 and comprises more than 770 thousand market records, over 943 million fill records, and nearly 2 million oracle events. We describe the data model, collection pipeline, and consistency mechanisms that make the dataset reproducible and extensible, and we demonstrate its utility through descriptive analyses of market activity and two downstream case studies: NBA outcome calibration and CPI expectation reconstruction.

cs.LG↗

arXiv2026

The Price of Interoperability: Exploring Cross-Chain Bridges and Their Economic Consequences

Modern blockchain ecosystems comprise many heterogeneous networks, creating a growing need for interoperability. Cross-chain bridges provide the core infrastructure for this interoperability by enabling verifiable state transitions that move assets and liquidity across chains. While prior work has focused mainly on bridge design and security, the system-level and economic consequences of cross-chain liquidity interoperability remain less understood. We present a large-scale empirical measurement study of cross-chain interoperability using a dataset spanning 20 blockchains and 16 major bridge protocols from 2022 to 2025. We model the multi-chain ecosystem as a time-varying weighted hypergraph and introduce two complementary metrics. Structural interoperability captures connectivity created by deployed bridge infrastructure, reflecting bridge coverage and redundancy independent of user behavior. Active interoperability captures realized cross-chain usage, measured by normalized transfer activity. This decomposition separates infrastructure capacity from actual utilization and yields several findings. The cross-chain network evolves from a sparse hub-and-spoke structure into a denser multi-hub core led by EVM-compatible chains. Bridge expansion and chain growth are uneven: some chains achieve broad structural access but limited realized usage, whereas others concentrate activity through a small set of routes. Overall, interoperability provision and interoperability use diverge substantially, showing that connectivity alone does not imply economically meaningful integration. These results provide a measurement framework for understanding how cross-chain infrastructure reshapes blockchain market structure and liquidity organization.

cs.PF↗

arXiv2026

Bridging Structured Knowledge and Data: A Unified Framework with Finance Applications

We develop Structured-Knowledge-Informed Neural Networks (SKINNs), a unified estimation framework that embeds theoretical, simulated, previously learned, or cross-domain insights as differentiable constraints within flexible neural function approximation. SKINNs jointly estimate neural network parameters and economically meaningful structural parameters in a single optimization problem, enforcing theoretical consistency not only on observed data but over a broader input domain through collocation, and therefore nesting approaches such as functional GMM, Bayesian updating, transfer learning, PINNs, and surrogate modeling. SKINNs define a class of M-estimators that are consistent and asymptotically normal with root-N convergence, sandwich covariance, and recovery of pseudo-true parameters under misspecification. We establish identification of structural parameters under joint flexibility, derive generalization and target-risk bounds under distributional shift in a convex proxy, and provide a restricted-optimal characterization of the weighting parameter that governs the bias-variance tradeoff. In an illustrative financial application to option pricing, SKINNs improve out-of-sample valuation and hedging performance, particularly at longer horizons and during high-volatility regimes, while recovering economically interpretable structural parameters with improved stability relative to conventional calibration. More broadly, SKINNs provide a general econometric framework for combining model-based reasoning with high-dimensional, data-driven estimation.

stat.ML↗

arXiv2026

Behavioral Economics of AI: LLM Biases and Corrections

Do generative AI models, particularly large language models (LLMs), exhibit systematic behavioral biases in economic and financial decisions? If so, how can these biases be mitigated? Drawing on the cognitive psychology and experimental economics literatures, we conduct the most comprehensive set of experiments to date$-$originally designed to document human biases$-$on prominent LLM families across model versions and scales. We document systematic patterns in LLM behavior. In preference-based tasks, responses become more human-like as models become more advanced or larger, while in belief-based tasks, advanced large-scale models frequently generate rational responses. Prompting LLMs to make rational decisions reduces biases.

econ.GN↗

arXiv2025

Inequality in the Age of Pseudonymity

Inequality measures such as the Gini coefficient are used to inform and motivate policymaking, and are increasingly applied to digital platforms. We analyze how measures fare in pseudonymous settings that are common in the digital age. One key challenge of such environments is the ability of actors to create fake identities under fictitious false names, also known as ``Sybils.'' While some actors may do so to preserve their privacy, we show that this can hamper inequality measurements: it is impossible for measures satisfying the literature's canonical set of desired properties to assess the inequality of an economy that may harbor Sybils. We characterize the class of all Sybil-proof measures, and prove that they must satisfy relaxed version of the aforementioned properties. Furthermore, we show that the structure imposed restricts the ability to assess inequality at a fine-grained level. We then apply our results to prove that popular measures are not Sybil-proof, with the famous Gini coefficient being but one example out of many. Finally, we examine dynamics leading to the creation of Sybils in digital and traditional settings.

cs.GT↗

arXiv2025

Growing the Efficient Frontier on Panel Trees

We introduce a new class of tree-based models, P-Trees, for analyzing (unbalanced) panel of individual asset returns, generalizing high-dimensional sorting with economic guidance and interpretability. Under the mean-variance efficient framework, P-Trees construct test assets that significantly advance the efficient frontier compared to commonly used test assets, with alphas unexplained by benchmark pricing models. P-Tree tangency portfolios also constitute traded factors, recovering the pricing kernel and outperforming popular observable and latent factor models for investments and cross-sectional pricing. Finally, P-Trees capture the complexity of asset returns with sparsity, achieving out-of-sample Sharpe ratios close to those attained only by over-parameterized large models.

cs.LG↗

arXiv2024

Trust Dynamics in Cryptocurrency Markets: Centralized vs. Decentralized Exchanges

Trust mechanisms diverge between centralized and decentralized exchanges, representing distinct sociotechnical governance paradigms. However, quantifying trust dynamics and their redistribution between these architectures remains empirically challenging, limiting understanding of how institutional shocks affect market behavior. The FTX collapse offers a natural experiment to bridge this gap. Through an interdisciplinary approach combining causal inference and computational text analysis, we find significant price declines and capital reallocation from centralized to decentralized exchanges following the event. While sentiment metrics showed no sharp discontinuities, topic modeling and network analysis of Discord communities reveal that seasonal holiday discourse obscured underlying trust concerns in centralized exchange forums. These findings underscore the fragility of institutional trust architectures and demonstrate how mixed methods can illuminate behavioral patterns during systemic crises, offering insights for exchange risk management and regulatory assessment.

econ.GN↗

arXiv2023

A Dataset of Uniswap daily transaction indices by network

Decentralized Finance (DeFi) is reshaping traditional finance by enabling direct transactions without intermediaries, creating a rich source of open financial data. Layer 2 (L2) solutions are emerging to enhance the scalability and efficiency of the DeFi ecosystem, surpassing Layer 1 (L1) systems. However, the impact of L2 solutions is still underexplored, mainly due to the lack of comprehensive transaction data indices for economic analysis. This study bridges that gap by analyzing over 50 million transactions from Uniswap, a major decentralized exchange, across both L1 and L2 networks. We created a set of daily indices from blockchain data on Ethereum, Optimism, Arbitrum, and Polygon, offering insights into DeFi adoption, scalability, decentralization, and wealth distribution. Additionally, we developed an open-source Python framework for calculating decentralization indices, making this dataset highly useful for advanced machine learning research. Our work provides valuable resources for data scientists and contributes to the growth of the intelligent Web3 ecosystem.

econ.GN↗

arXiv2022

Is Decentralized Finance Actually Decentralized? An Interdisciplinary Framework Integrating Network Theory, Agent-Based Simulation, and Longitudinal Evidence from Aave, GHO Issuance, and Cross-Chain Expansion

Decentralized finance (DeFi) can broaden access while leaving activity, network position, and infrastructure concentrated. We develop a four-dimensional framework for participation, activity distribution, structural position, and infrastructure dependence, integrating network theory, theorem-consistent agent-based simulation, and longitudinal analysis of 1,956,216 Aave V3 Pool events. We study GHO issuance on Ethereum (15 July 2023) and its first cross-chain expansion to Aave's existing Arbitrum market (2 July 2024). Excluding each activation week, mean weekly active position-holder addresses increased by 91.0% around Ethereum issuance and 1.7% around Arbitrum expansion, while activity concentration fell by 31.5% on Ethereum but rose by 58.1% on Arbitrum. On a common 2024 calendar, the Arbitrum--Gnosis DiD-style change is +1.9833 for log participation and -0.01842 for position-holder-event HHI. Rule-based simulations recover the analytical equilibrium and show why aggregate growth can coexist with lower, unchanged, or higher concentration, while chain dispersion alone cannot establish route or shared-component resilience. Role-aware analysis further shows that network-structure conclusions vary by protocol action and scale. Intellectually, the framework explains why four dimensions of decentralization can diverge. Practically, it helps researchers, protocol designers, governance communities, and policymakers assess stablecoin growth without equating adoption with decentralization.

econ.GN↗

arXiv2021

An AI-assisted Economic Model of Endogenous Mobility and Infectious Diseases: The Case of COVID-19 in the United States

We build a deep-learning-based SEIR-AIM model integrating the classical Susceptible-Exposed-Infectious-Removed epidemiology model with forecast modules of infection, community mobility, and unemployment. Through linking Google's multi-dimensional mobility index to economic activities, public health status, and mitigation policies, our AI-assisted model captures the populace's endogenous response to economic incentives and health risks. In addition to being an effective predictive tool, our analyses reveal that the long-term effective reproduction number of COVID-19 equilibrates around one before mass vaccination using data from the United States. We identify a "policy frontier" and identify reopening schools and workplaces to be the most effective. We also quantify protestors' employment-value-equivalence of the Black Lives Matter movement and find that its public health impact to be negligible.

econ.GN↗

arXiv2021

Endogenous Growth Under Multiple Uses of Data

We model a dynamic data economy with fully endogenous growth where agents generate data from consumption and share them with innovation and production firms. Different from other productive factors such as labor or capital, data are nonrival in their uses across sectors which affect both the level and growth of economic outputs. Despite the vertical nonrivalry, the innovation sector dominates the production sector in data usage and contribution to growth because (i) data are dynamically nonrival and add to knowledge accumulation, and (ii) innovations "desensitize" raw data and enter production as knowledge, which allays consumers' privacy concerns. Data uses in both sectors interact to generate spillover of allocative distortion and exhibit an apparent substitutability due to labor's rivalry and complementarity with data. Consequently, growth rates under a social planner and a decentralized equilibrium differ, which is novel in the literature and has policy implications. Specifically, consumers' failure to fully internalize knowledge spillover when bearing privacy costs, combined with firms' market power, underprice data and inefficiently limit their supply, leading to underemployment in the innovation sector and a suboptimal long-run growth. Improving data usage efficiency is ineffective in mitigating the underutilization of data, but interventions in the data market and direct subsidies hold promises.

econ.TH↗

arXiv2021

Knowledge Accumulation, Privacy, and Growth in a Data Economy

We build an endogenous growth model with consumer-generated data as a new key factor for knowledge accumulation. Consumers balance between providing data for profit and potential privacy infringement. Intermediate good producers use data to innovate and contribute to the final good production, which fuels economic growth. Data are dynamically nonrival with flexible ownership while their production is endogenous and policy-dependent. Although a decentralized economy can grow at the same rate (but are at different levels) as the social optimum on the Balanced Growth Path, the R&D sector underemploys labor and overuses data -- an inefficiency mitigated by subsidizing innovators instead of direct data regulation. As a data economy emerges and matures, consumers' data provision endogenously declines after a transitional acceleration, allaying long-run privacy concerns but portending initial growth traps that call for interventions.

econ.TH↗

arXiv2021

Financing Entrepreneurship and Innovation in China

This study reports on the current state-of-affairs in the funding of entrepreneurship and innovations in China and provides a broad survey of academic findings on the subject. We also discuss the implications of these findings for public policies governing the Chinese financial system, particularly regulations governing the initial public offering (IPO) process. We also identify and discuss promising areas for future research.

econ.GN↗