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Limit Order Book Dynamics in Matching Markets: Microstructure, Spread, and Execution Slippage

arXiv.org Artificial Intelligence

Conventional models of matching markets assume that monetary transfers can clear markets by compensating for utility differentials. However, empirical patterns show that such transfers often fail to close structural preference gaps. This paper introduces a market microstructure framework that models matching decisions as a limit order book system with rigid bid ask spreads. Individual preferences are represented by a latent preference state matrix, where the spread between an agent's internal ask price (the unconditional maximum) and the market's best bid (the reachable maximum) creates a structural liquidity constraint. We establish a Threshold Impossibility Theorem showing that linear compensation cannot close these spreads unless it induces a categorical identity shift. A dynamic discrete choice execution model further demonstrates that matches occur only when the market to book ratio crosses a time decaying liquidity threshold, analogous to order execution under inventory pressure. Numerical experiments validate persistent slippage, regional invariance of preference orderings, and high tier zero spread executions. The model provides a unified microstructure explanation for matching failures, compensation inefficiency, and post match regret in illiquid order driven environments.


A Experimental Setup

Neural Information Processing Systems

A.2 Training Settings of T eacher We provide training settings of the teacher w.r.t. In practice, we do not optimize the student and the generator via the plain losses in Eq. 4 and Eq. 6, Number of steps for pretraining G, ฮด: the bound in Eqs. A.4 Generator Architectures In Table 8, we show different architectures of the generator w.r.t. ResNetBlockY are provided in Table 9. ConvBlockX(c This is because the "uncond" generator has learned to jump "sum" generator enables stable training of our model and gives the best accuracy and crossentropy The "cat" generator only yields good results at "uncond" generator does not encounter any problem with MAD to learn faster than the "cat" generator. An important question is "What is a reasonable upper bound


Adaptive Classifier-Free Guidance via Dynamic Low-Confidence Masking

arXiv.org Artificial Intelligence

Classifier-Free Guidance (CFG) significantly enhances controllability in generative models by interpolating conditional and unconditional predictions. However, standard CFG often employs a static unconditional input, which can be suboptimal for iterative generation processes where model uncertainty varies dynamically. We introduce Adaptive Classifier-Free Guidance (A-CFG), a novel method that tailors the unconditional input by leveraging the model's instantaneous predictive confidence. At each step of an iterative (masked) diffusion language model, A-CFG identifies tokens in the currently generated sequence for which the model exhibits low confidence. These tokens are temporarily re-masked to create a dynamic, localized unconditional input. This focuses CFG's corrective influence precisely on areas of ambiguity, leading to more effective guidance. We integrate A-CFG into a state-of-the-art masked diffusion language model and demonstrate its efficacy. Experiments on diverse language generation benchmarks show that A-CFG yields substantial improvements over standard CFG, achieving, for instance, a 3.9 point gain on GPQA. Our work highlights the benefit of dynamically adapting guidance mechanisms to model uncertainty in iterative generation.


Diffusion Models as Network Optimizers: Explorations and Analysis

arXiv.org Artificial Intelligence

Network optimization is a fundamental challenge in the Internet of Things (IoT) network, often characterized by complex features that make it difficult to solve these problems. Recently, generative diffusion models (GDMs) have emerged as a promising new approach to network optimization, with the potential to directly address these optimization problems. However, the application of GDMs in this field is still in its early stages, and there is a noticeable lack of theoretical research and empirical findings. In this study, we first explore the intrinsic characteristics of generative models. Next, we provide a concise theoretical proof and intuitive demonstration of the advantages of generative models over discriminative models in network optimization. Based on this exploration, we implement GDMs as optimizers aimed at learning high-quality solution distributions for given inputs, sampling from these distributions during inference to approximate or achieve optimal solutions. Specifically, we utilize denoising diffusion probabilistic models (DDPMs) and employ a classifier-free guidance mechanism to manage conditional guidance based on input parameters. We conduct extensive experiments across three challenging network optimization problems. By investigating various model configurations and the principles of GDMs as optimizers, we demonstrate the ability to overcome prediction errors and validate the convergence of generated solutions to optimal solutions. We provide code and data at https://github.com/qiyu3816/DiffSG.


Classifier-free graph diffusion for molecular property targeting

arXiv.org Artificial Intelligence

This work focuses on the task of property targeting: that is, generating molecules conditioned on target chemical properties to expedite candidate screening for novel drug and materials development. DiGress is a recent diffusion model for molecular graphs whose distinctive feature is allowing property targeting through classifier-based (CB) guidance. While CB guidance may work to generate molecular-like graphs, we hint at the fact that its assumptions apply poorly to the chemical domain. Based on this insight we propose a classifier-free DiGress (FreeGress), which works by directly injecting the conditioning information into the training process. CF guidance is convenient given its less stringent assumptions and since it does not require to train an auxiliary property regressor, thus halving the number of trainable parameters in the model. We empirically show that our model yields up to 79% improvement in Mean Absolute Error with respect to DiGress on property targeting tasks on QM9 and ZINC-250k benchmarks. As an additional contribution, we propose a simple yet powerful approach to improve chemical validity of generated samples, based on the observation that certain chemical properties such as molecular weight correlate with the number of atoms in molecules.


STEVE-1: A Generative Model for Text-to-Behavior in Minecraft

arXiv.org Artificial Intelligence

Constructing AI models that respond to text instructions is challenging, especially for sequential decision-making tasks. This work introduces an instruction-tuned Video Pretraining (VPT) model for Minecraft called STEVE-1, demonstrating that the unCLIP approach, utilized in DALL-E 2, is also effective for creating instruction-following sequential decision-making agents. STEVE-1 is trained in two steps: adapting the pretrained VPT model to follow commands in MineCLIP's latent space, then training a prior to predict latent codes from text. This allows us to finetune VPT through self-supervised behavioral cloning and hindsight relabeling, bypassing the need for costly human text annotations. By leveraging pretrained models like VPT and MineCLIP and employing best practices from text-conditioned image generation, STEVE-1 costs just $60 to train and can follow a wide range of short-horizon open-ended text and visual instructions in Minecraft. STEVE-1 sets a new bar for open-ended instruction following in Minecraft with low-level controls (mouse and keyboard) and raw pixel inputs, far outperforming previous baselines. We provide experimental evidence highlighting key factors for downstream performance, including pretraining, classifier-free guidance, and data scaling. All resources, including our model weights, training scripts, and evaluation tools are made available for further research.


Meta-Learning via Classifier(-free) Diffusion Guidance

arXiv.org Artificial Intelligence

We introduce meta-learning algorithms that perform zero-shot weight-space adaptation of neural network models to unseen tasks. Our methods repurpose the popular generative image synthesis techniques of natural language guidance and diffusion models to generate neural network weights adapted for tasks. We first train an unconditional generative hypernetwork model to produce neural network weights; then we train a second "guidance" model that, given a natural language task description, traverses the hypernetwork latent space to find high-performance task-adapted weights in a zero-shot manner. We explore two alternative approaches for latent space guidance: "HyperCLIP"-based classifier guidance and a conditional Hypernetwork Latent Diffusion Model ("HyperLDM"), which we show to benefit from the classifier-free guidance technique common in image generation. Finally, we demonstrate that our approaches outperform existing multi-task and meta-learning methods in a series of zero-shot learning experiments on our Meta-VQA dataset.


EDICT: Exact Diffusion Inversion via Coupled Transformations

arXiv.org Artificial Intelligence

Finding an initial noise vector that produces an input image when fed into the diffusion process (known as inversion) is an important problem in denoising diffusion models (DDMs), with applications for real image editing. The state-of-the-art approach for real image editing with inversion uses denoising diffusion implicit models (DDIMs) to deterministically noise the image to the intermediate state along the path that the denoising would follow given the original conditioning. However, DDIM inversion for real images is unstable as it relies on local linearization assumptions, which result in the propagation of errors, leading to incorrect image reconstruction and loss of content. To alleviate these problems, we propose Exact Diffusion Inversion via Coupled Transformations (EDICT), an inversion method that draws inspiration from affine coupling layers. EDICT enables mathematically exact inversion of real and model-generated images by maintaining two coupled noise vectors which are used to invert each other in an alternating fashion. Using Stable Diffusion, a state-of-the-art latent diffusion model, we demonstrate that EDICT successfully reconstructs real images with high fidelity. On complex image datasets like MS-COCO, EDICT reconstruction significantly outperforms DDIM, improving the mean square error of reconstruction by a factor of two. Using noise vectors inverted from real images, EDICT enables a wide range of image edits--from local and global semantic edits to image stylization--while maintaining fidelity to the original image structure. EDICT requires no model training/finetuning, prompt tuning, or extra data and can be combined with any pretrained DDM. Code is available at https://github.com/salesforce/EDICT.


Classifier-Free Diffusion Guidance

arXiv.org Artificial Intelligence

Classifier guidance is a recently introduced method to trade off mode coverage and sample fidelity in conditional diffusion models post training, in the same spirit as low temperature sampling or truncation in other types of generative models. Classifier guidance combines the score estimate of a diffusion model with the gradient of an image classifier and thereby requires training an image classifier separate from the diffusion model. It also raises the question of whether guidance can be performed without a classifier. We show that guidance can be indeed performed by a pure generative model without such a classifier: in what we call classifier-free guidance, we jointly train a conditional and an unconditional diffusion model, and we combine the resulting conditional and unconditional score estimates to attain a trade-off between sample quality and diversity similar to that obtained using classifier guidance. Diffusion models have recently emerged as an expressive and flexible family of generative models, delivering competitive sample quality and likelihood scores on image and audio synthesis tasks (Sohl-Dickstein et al., 2015; Song & Ermon, 2019; Ho et al., 2020; Song et al., 2021b; Kingma et al., 2021; Song et al., 2021a).