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 Elements of
Concave Analysis
and Applications
 Elements of
Concave Analysis
and Applications

Prem K. Kythe
CRC Press
Taylor & Francis Group
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© 2018 by Taylor & Francis Group, LLC

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Version Date: 20180414

International Standard Book Number-13: 978-1-138-70528-9 (Hardback)

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Library of Congress Cataloging-in-Publication Data

Names: Kythe, Prem K., author.

Title: Elements of concave analysis and applications / Prem K. Kythe.
Description: Boca Raton, Florida : CRC Press, [2018] | Includes
bibliographical references and index.
Identifiers: LCCN 2018006905| ISBN 9781138705289 (hardback : alk. paper) |
ISBN 9781315202259 (ebook : alk. paper)
Subjects: LCSH: Concave functions--Textbooks. | Convex functions--Textbooks.
| Functions of real variables--Textbooks. | Matrices--Textbooks.
Classification: LCC QA353.C64 K96 2018 | DDC 515/.88--dc23
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 To the memory of
Dr. James H. & Mrs. Mickey Abbott
with reverence and love
Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Notations, Definitions, and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
1 Matrix Algebra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Matrix Inversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3.1 Cofactor Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.4 Systems of Linear Equations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4.1 Solution with the Inverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.4.2 Cramer’s Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.4.3 Gaussian Elimination Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.5 Definite and Semidefinite Matrices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.6 Special Determinants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.6.1 Jacobian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.6.2 Hessian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.6.3 Bordered Hessian: Two Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.6.4 Bordered Hessian: Single Function . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.7 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2 Differential Calculus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.1.1 Limit of a Function at a Point . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.2 Theorems on Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2.1 Limit at Infinity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.2.2 Infinite Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.3 Global and Local Extrema of Functions . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.4 First and Second Derivative Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.4.1 Definition of Concavity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.5 Vector-Valued Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.5.1 Geometric Meaning of the Inflection Point . . . . . . . . . . . . . . . . . . . 40
2.6 Optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.7 Multivariate Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.7.1 Geometric Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
viii CONTENTS

2.7.2 Gradient at a Point . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

2.8 Mathematical Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.8.1 Isocost Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.8.2 Supply and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.8.3 IS-LM Equation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.8.4 Marginal of an Economic Function . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.8.5 Marginal Rate of Technical Substitution . . . . . . . . . . . . . . . . . . . . . 50
2.9 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3 Concave and Convex Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3.1 Convex Sets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3.2 Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.2.1 Properties of Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.3 Jensen’s Inequality for Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . 69
3.4 Convex Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
3.4.1 Properties of Convex Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
3.4.2 Jensen’s Inequality for Convex Functions . . . . . . . . . . . . . . . . . . . . 73
3.5 Differentiable Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.6 Unconstrained Optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
3.7 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4 Concave Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
4.1 Optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
4.1.1 Unconstrained Optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
4.2 Method of Lagrange Multipliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.2.1 Constrained Optimization with Equality Constraint . . . . . . . . . . 89
4.3 Karush-Kuhn-Tucker Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
4.3.1 Equality and Inequality Constraints . . . . . . . . . . . . . . . . . . . . . . . . . 91
4.3.2 Necessary Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
4.3.3 Regularity Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
4.3.4 Sufficient Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
4.4 Inequality Constrained Optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.5 Application to Mathematical Economics . . . . . . . . . . . . . . . . . . . . . . . . . 105
4.5.1 Peak Load Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
4.6 Comparative Statics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
4.7 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
5 Convex Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
5.1 Minimization Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
5.1.1 Unconstrained Minimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
5.1.2 Equality Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
5.1.3 Equality Constraints: General Case . . . . . . . . . . . . . . . . . . . . . . . . 123
5.1.4 Inequality Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
5.1.5 General Linear Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
5.2 Nonlinear Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
5.2.1 Two Inequality Constraints and One Equality Constraint . . . 131
5.2.2 Two Inequality Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
 CONTENTS ix

5.3 Fritz John Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

5.3.1 Feasibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
5.3.2 Slater’s Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
5.4 Lagrangian Duality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
5.4.1 Geometrical Interpretation of Duality . . . . . . . . . . . . . . . . . . . . . . 141
5.4.2 Saddle Point Sufficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
5.4.3 Strong Duality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
5.5 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
6 Quasi-Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.1 Quasi-Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.2 Differentiable Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
6.3 Theorems on Quasi-Concavity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
6.4 Three-Dimensional Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
6.5 Multivariate Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
6.6 Sums of Quasi-Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
6.7 Strictly Quasi-Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
6.7.1 Sums of Strictly Quasi-Concave Functions . . . . . . . . . . . . . . . . . . 167
6.8 Quasi-Concave Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
6.9 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
6.6 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
7 Quasi-Convex Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
7.1 Quasi-Convex Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
7.2 Properties of Quasi-Convex Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
7.3 Bordered Hessian Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
7.3.1 Properties of the Bordered Hessian . . . . . . . . . . . . . . . . . . . . . . . . . 186
7.4 Quasi-Convex Optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
7.4.1 No Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
7.4.2 Equality Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
7.4.3 Inequality Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
7.4.4 Convex Feasibility Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
7.4.5 Equality and Inequality Constraints . . . . . . . . . . . . . . . . . . . . . . . . 190
7.4.6 Minmax Theorem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
7.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
7.6 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
8 Log-Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
8.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
8.1.1 Log-Concavity Preserving Operations . . . . . . . . . . . . . . . . . . . . . . 198
8.2 Theorems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
8.2.1 General Results on Log-Concavity . . . . . . . . . . . . . . . . . . . . . . . . . . 200
8.2.2 Log-Concavity of Density and Left-Side Integral . . . . . . . . . . . . . 202
8.2.3 Reliability Theory and Right-Side Integral . . . . . . . . . . . . . . . . . . 203
8.2.4 Mean Residual Lifetime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
8.3 Asplund Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
8.3.1 Derivatives of Integrals of Log-Concave Functions . . . . . . . . . . 204
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x CONTENTS

8.3.2 Adding Log-Concave Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

8.3.3 Asplund Sum and Conjugate Functions . . . . . . . . . . . . . . . . . . . . . 205
8.3.4 Integral Functional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
8.3.5 Area Measure of Log-Concave Functions . . . . . . . . . . . . . . . . . . . . 207
8.4 Log-Concavity of Nonnegative Sequences . . . . . . . . . . . . . . . . . . . . . . . . 207
8.5 Log-Concave Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
7.10 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
9 Quadratic Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
9.1 Quadratic Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
9.2 Hildreth-D’Esopo Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
9.3 Beale’s Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
9.4 Wolfe’s Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
9.5 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
10 Optimal Control Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
10.1 Hamiltonian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
10.2 Optimal Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
10.2.1 Sufficient Conditions for Optimization . . . . . . . . . . . . . . . . . . . . . 235
10.3 Free Endpoint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
10.4 Inequality Constraints at the Endpoints . . . . . . . . . . . . . . . . . . . . . . . 237
10.5 Discounted Optimal Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
10.6 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
11 Demands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
11.1 Shephard’s Lemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
11.2 Marshallian Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
11.3 Hicksian Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
11.4 Slutsky Equation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
11.4.1 Giffen Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
11.4.2 Veblen Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
11.5 Walrasian Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
11.6 Cost Minimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
11.7 Expenditure Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
11.8 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
11.9 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
12 Black-Scholes Equation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
12.1 Black-Scholes Equation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
12.1.2 Itô’s Lemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
12.1.2 Derivation of Black-Scholes Equation . . . . . . . . . . . . . . . . . . . . . . 272
12.2 Solution of Black-Scholes Equation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
12.2.1 Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
12.2.2 Solution of the Heat Equation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
12.2.3 Black-Scholes Call Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
12.2.4 Some Finance Terms and Arbitrage . . . . . . . . . . . . . . . . . . . . . . . 277
12.2.5 Self-Financing Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
12.2.6 Implied Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
 CONTENTS xi

12.3 Black-Scholes Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282

12.4 Use of Greek Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
12.5 Log-normal Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
12.5.1 Log-normal c.d.f and p.d.f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
12.5.2 Log-normal Conditional Expected Value . . . . . . . . . . . . . . . . . . . 286
12.6 Black-Scholes Call Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
12.6.1 Black-Scholes Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
12.6.2 Black-Scholes under a Different Numéraire . . . . . . . . . . . . . . . . 288
12.6.3 Black-Scholes by Direct Integration . . . . . . . . . . . . . . . . . . . . . . . 290
12.6.4 Feynman-Kac Theorem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292
12.6.5 CAPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292
12.6.6 CAPM for Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
12.7 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
12.7.1 Continuous Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
12.7.2 Lumpy Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
12.8 Solutions of SDEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
12.8.1 Stock Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
12.8.2 Bond Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
12.8.3 Discounted Stock Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
12.8.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
12.9 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
A Probability Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
B Differentiation of Operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
C Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
D Laplace Transforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
E Implicit Function Theorem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
F Locally Nonsatiated Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Preface

This textbook on concave analysis aims at two goals. Firstly, it provides sim-
ple yet comprehensive subject matter to the readers who are undergraduate
seniors and beginning graduate students in mathematical economics and busi-
ness mathematics. For most readers the only prerequisites are courses in ma-
trix algebra and differential calculus including partial differentiation; however,
for the last chapter a thorough working knowledge of linear partial differen-
tial equations and the Laplace transforms is required. The readers can omit
this chapter if not required. The subject of the book centers mostly around
concave and convex optimization; other related topics are also included. The
details are provided below in the overview section.
Although there are many excellent books on the market, almost all of
them are at times difficult to understand. They are very heavy on theoreti-
cal aspects, and generally fail to provide ample worked-out examples to give
readers easy understanding and workability.
The second goal is elucidated below in the section ‘To Readers’.

Motivation
The subject of convexity and quasi-convexity has been a model for economic
theorists to make decisions about cost minimization and revenue maximiza-
tion. This has resulted in a lot of publications in convex optimization. So
why is there keen interest in concave and quasi-concave functions? Firstly,
economic theory dictates that all utility functions are quasi-convex and that
all cost functions are concave in input prices. Therefore, a cost function that
is not concave in input prices is not a cost function. Secondly, the standard
model in economic theory consists in a set of alternatives and an ordering of
these alternatives, according to different priorities and interests. The process
that a decision maker follows is to choose a favorite alternative with the prop-
erty that no other alternative exceeds the ordering. In such a situation the
decision maker often uses a function that ‘represents’ this ordering. Thus, for
example, suppose there are four alternatives, say, a, b, c and d, and suppose
that the decision maker prefers a to b and treats both c and d as equally
desirable. Any function, like f , with f (a) > f (b) > f (c) = f (d) may rep-
xiv PREFACE

resent the ordering, irrespective of whatever numerical values (level curves)

such ordering has. However, the situation changes when the decision maker is
a consumer who is choosing between different goods and prices. In this case
the consumer’s ordering, based on the level curves (or indifference curves) of
chosen alternatives, can look quite different from that of the businessperson.
It so happens that the consumer’s ordering becomes concave (less expense,
more goods). But this situation implies that any function that represents the
consumer’s interest is, at best, quasi-concave. This natural phenomenon is, of
course, based on a deep but simple result that concave and convex functions
are diametrically opposite to each other in behavior and intent.
However, the subject of concave analysis, with emphasis on concave, quasi-
concave and log-concave functions, has appeal to both the consumer and busi-
ness organizations.

Overview
A general description of the topics covered in the book is as follows: Chap-
ter 1 introduces a review of matrix algebra that includes definitions, matrix
inversion, solutions of systems of linear algebraic equations, definite and semi-
definite matrices, Jacobian, two types of Hessian matrices, and the Hessian
test. Chapter 2 is a review of calculus, with topics dealing with limits, deriva-
tive, global and local extrema, first and second derivative tests, vector-valued
functions, optimization, multivariate functions, and basic concepts of mathe-
matical economics.
Concave and convex functions are introduced in Chapter 3, starting with
the notion of convex sets, Jensen’s inequalities for both concave and convex
functions, and unconstrained optimization. Chapter 4 deals with concave
programming; it is devoted to optimization problems on maximization mostly
with inequality constraints, and using the Lagrange method of multipliers and
the KKT necessary and sufficient conditions. Applications to mathematical
economics include the topic of peak price loading, and comparative statics is
discussed. Optimization problems focusing on minimization are introduced
in Chapter 5 on convex programming, in order to compare it with concave
optimization. Nonlinear programming is discussed; the Fritz John and Slater
conditions are presented, and the topic of Lagrangian duality is discussed.
Chapters 6 and 7 deal with quasi-concave and quasi-convex functions.
Both topics are important in their own applications. The single-function
bordered Hessian test on quasi-concavity and quasi-convexity is presented,
and optimization problems with types of functions and the minmax theorem
are provided. Chapter 8 deals with log-concave functions; general results
on log-concavity are presented, with application on mean residual life; and
the Asplund sum is introduced, with its algebra, derivatives, and area mea-
sure. Log-concavity of nonnegative sequences is discussed, and all log-concave
 PREFACE xv

probability distributions with their density functions and cumulative density

functions are presented in detail.
Chapter 9 deals with the quadratic programming to optimization prob-
lems, and presents the following numerical methods: (i) Hildreth-D’Esopo
method; (ii) Beale’s method; and (iii) Wolfe’s method. The optimal con-
trol theory is discussed in Chapter 10, using the Hamiltonian and different
types of optimization problems. Three types of demands, namely Marshal-
lian, Hicksian, and Walrasian, are introduced in Chapter 11, using the Shep-
hard’s lemma and the Slusky equation with applications to cost minimiza-
tion, and the Giffen and Veblen goods. Chapter 12 is exclusively devoted to
the Black-Scholes differential equation, its solution, log-normal distribution,
Black-Scholes call price, Feynman-Kac theorem, capital asset pricing model,
dividends, stocks, bonds, and discounted stock prices.
There are six appendices: (A) Some useful topics on probability; (B) differ-
entiation of operators involving the Gateaux differential, Fréchet derivative,
the concept of the gradient, and Taylor’s series first- and second-order approx-
imations; (C) a list of probability distributions; (D) a self-contained detailed
discussion of the Laplace transforms; (E) implicit function theorem; and (F)
locally nonsatiated function. The bibliography toward the end of the book
contains the references cited in the book, followed by the Index.
The book contains over 330 examples and exercises; most exercises are
provided with solutions, simpler ones with hints and answers. Since the book
uses and discusses vectors and matrices, care is taken, in order to avoid confu-
sion, to set all (row/column) vectors and matrices in bold lowercase and bold
uppercase, respectively.
This is an introductory textbook that provides a good combination of
methodology, applications, and hands-on projects for students with diverse
interests from mathematical economics, business mathematics, engineering,
and other related applied mathematics courses.

To Readers
The second goal concerns specifically the abuse and misuse of a couple of
standard mathematical notations in this field of scientific study. They are
the gradient ∇f and the Laplacian ∇2 f of a function f (x) in Rn . Somehow,
and somewhere, a tradition started to replace the first-order partials of the
function f by its gradient ∇f . It seems that this tradition started without
any rigorous mathematical argument in its support. This book has provided
a result (Theorem 2.18) that establishes that only under a specific necessary
condition the column vector [∂f /∂x1 · · · ∂f /∂xn ] can replace the gradient
vector ∇f , and these two quantities, although isomorphic to each other, are
not equal. Moreover, it is shown that any indiscriminate replacement between
these two quantities leads to certain incorrect results (§3.5).
xvi PREFACE

The other misuse deals with the Laplacian ∇2 f , which has been used to
represent the Hessian matrix (§1.6.2), without realizing that ∇2 f is the trace
(i.e., sum of the diagonal elements) of the Hessian matrix itself. This abuse
makes a part equal to the whole. Moreover, ∇2 is the well-known linear partial
differential operator of the elliptic type known as the Laplacian.
It appears that this misuse perhaps happened because of the term ‘vector’,
which is used (i) as a scalar quantity, having only magnitude, as in the row
or column vectors (in the sense of a matrix), and (ii) as a physical quantity,
such as force, velocity, acceleration, and momentum, having both magnitude
and direction. The other factor for the abuse in the case of the gradient is
the above-mentioned linear isomorphic mapping between the gradient vector
∇f and the (scalar) column vector [∂f /∂x1 · · · ∂f /∂xn ]T . This isomorphism
has been then literally used as ‘equality’ between these two quantities. Once
the case for ∇f became the tradition, the next choice ∇2 f for the Hessian
matrix became another obvious, but incorrect, tradition.
As readers, you will find an attention symbol, !!! , at different parts of the
book. It is used to point out the significance of the statements found there.
The other less important notations are the ≺, the ⊕ and the ⊙ symbols.
Although borrowed from physics and astronomy, these symbols are acceptable
with a different but almost similar meaning provided that they are properly
defined as given in the section on Notations. Moreover, the ⊕ and the ⊙
symbols have now become so common due to the advancement in cell phones
and related electronic technology that they are probably losing their rigorous
mathematical significance.

Acknowledgments
I take this opportunity to thank Mr. Sarfraz Khan, Executive Editor, Taylor
& Francis, for his support, and Mr. Callum Fraser for coordinating the book
project. I also thank the Project Editor Michele A. Dimont for doing a great
job of editing the text. Thanks are due to the reviewers and to some of my
colleagues who made some very valuable suggestions to improve the book.
Lastly, I thank my friend Michael R. Schäferkotter for help and advice freely
given whenever needed.

Prem K. Kythe
Notations, Definitions, and Acronyms

A list of the notations, definitions, abbreviations, and acronyms used in this

book is given below.

a.s., almost surely

A, matrix
AT , transpose of the matrix A
|A|, determinant of a matrix A
adj A, adjoint of a matrix A
det(A) or |A|, determinant of a matrix A
A−1 , inverse of a matrix A
aij , element of a matrix A in the ith row and jth column
B(c, r), ball with center c and radius r
B(X, Y ), class of all bounded linear operators from X into Y
B, bordered Hessian matrix: one function
C 0 (D), class of functions continuous on a region D
C k (D), class of continuous functions with kth continuous derivative
on a region D, 0 ≤ k < ∞
C ∞ (D), class of continuous functions infinitely differentiable on a region D
C-function, same as a C 0 -function; continuous function
C, cofactor matrix
Cij , cofactor of the element in the ith row and jth column
C T , transpose of C = adj A
Ci , eigenvectors
C, cost; consumption
C(Q), production cost
CAPM, capital asset pricing model
CES, constant elasticity of substitution
CLPD, constant positive linear dependence constraint qualification
CLT, central limit theorem
CQ, constraint qualification
CRCQ, constant rank constraint qualification
CU, concave upward
CD, concave downward
xviii NOTATIONS, DEFINITIONS, AND ACRONYMS

Cov, covariance
c.d.f., cumulative distribution function
c(w, y), cost function
Dt , derivative with respect to t
Df (x), derivative of f (x) in Rn
D, aggregated demand
D, domain, usually in the z-plane
dist(A, B), distance between points (or sets) A and B
dom(f ), domain of a function f
DRS, decreasing return to scale
e, expenditure function
E, amount allocated for expenditure
E[X], expected value of a random vector X
E(f ), entropy of f
Eq(s)., Equation(s) (when followed by an equation number)
ei , ith unit vector, i = 1, . . . , n
[e], set of the unit vectors ei in Rn
epi(f ), epigraph of f
e(p, u), expenditure function
F , field
f : X 7→ Y , function f maps the set X into (onto) the set Y
f ◦ g, composite function of f and g: (f ◦ g)(·) = f (g(·))
f ′ , first derivative of f
f ′′ , second derivative of f
f (n) , nth derivative of f
∂f (x)
, first-order partials of f in Rn , also written fi , for i = 1, . . . , n; also
∂xi
∂f ∂f ∂f
written as fx , fy , fx for , , in R3
∂x ∂y ∂z
∂ 2 f (x)
, second-order partials of f in Rn , also written as fij for i, j = 1, . . . , n;
∂xi ∂xj
∂2f ∂2f ∂2f
also written as fxx , fyy , fzx for , , in R3
∂x2 ∂y 2 ∂z 2
(f ◦ g)(x),= f (g(x)), composition of functions f and g
Rt Rt
f ⋆ g, convolution of f (t) and g(t) (= 0 f (t − u)g(u) du = 0 f (ug (t − u) du =
L−1 {G(s)F (s)})
FJ, Fritz John conditions R∞
F (s), Laplace transform of f (t) (= 0 est f (t) dt)
G, government expenditure; constrained set
Gmin , positive minimal accepted level of profit
G(·; ·), Green’s function
 NOTATIONS, DEFINITIONS, AND ACRONYMS xix

Geom(p), geometric distribution with probability distribution

H, Hamiltonian
hyp, hypograph of f
hj (p, u), Hicksian demand for good j
h, hours of work, h = T − τ
H, Hessian matrix
H̄, bordered Hessian matrix: two functions, f and the constraint g
iff, if and only if
i, income
I, income
I(p), e-beam intensity at position p
IK (x) = 0 if x ∈ K; ∞ if x ∈ /K
IS, commodity equilibrium
Int (D), interior of a domain D
IRS, increasing return to scale
I, identity matrix
j , goods number; input factor
|J|, or J, or simply J, Jacobian determinant
K, capital
KKT, Karush-Kuhn-Tucker conditions
L, Lagrangian function; also, labor
∂L ∂L
Lx , Ly , = , first-order partials of L
∂x ∂y
∂ 2 L ∂ 2 L ∂ 2L ∂ 2 L
Lxx , Lyy , Lxy , Lyx , = , , , , second-order partials of L
∂x2 ∂y 2 ∂x∂y ∂y∂x
L{f (t)}, Laplace transform of f (t), also denoted by F (s)
L−1 {f (t)}, inverse Laplace transform, also denoted by f (t)
L2 {f (t); s}, Laplace2 transform (also known as L2 -transform) of f (t; s)
LICQ, linear independence constraint qualification
LM, monetary equilibrium
LM, monetary equilibrium
LQC, linearity constrained qualifications
mrl(x), mean residual lifetime function
Mij , minor of the element aij of a matrix A
Md , demand for money
Ms , supply of money
Mt , transition-precautionary demand for money
Mz , speculative demand for money
MC, marginal cost
MFCQ, Mangasarian-Fromovitz constraint qualification
ME, marginal expenditure
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xx NOTATIONS, DEFINITIONS, AND ACRONYMS

MPC, marginal propensity to consume

MR, marginal revenue
MRTS, marginal rate of technical substitution
N, set of natural numbers (positive integers)
N(A), null space of matrix A
N , numéraire
ND, negative definite
NSD, negative semidefinite
p.d.f., probability density function, or density function
p, prices (a vector with component pj )
P , profit; supply; nonlabor income
PV , probability function for a random variable V
PK price for K
PL , price for L
P, probability
PD, positive definite
PSD, positive semidefinite
q, Cobb-Douglas production function; also, amount of consumed good
Q, quantity of output produced; risk neutral measure
Qs , supply
Qd , demand
Q, level of output
QNCQ, quasi-normality constraint qualification
QP, quadratic programming
r, eigenvalue of a matrix A
r(t), vector-valued function (= f (t)i + g(t)j + h(t)k)
R, revenue
R(Q), sales revenue
R(f ), range of function f
R, the real line; real plane
R3 , three-dimensional real space
Rn , n-dimensional real space
R+ , nonnegative real numbers
R++ , positive real numbers
s, variable of Laplace transform
S, slackness variable; savings
S(p, w), Slutsky matrix
SC, Slater condition
SDE, stochastic differential equation
SOSC, second-order sufficient condition
tr(A), trace of a matrix A (sum of the diagonal elements)
 NOTATIONS, DEFINITIONS, AND ACRONYMS xxi

T , total time available

TC, total cost
TE, total expenditure
TP, total product
TPk , totally positive of order k
TR, total revenue
u, utility
u̇, time-derivative of a function u
U (y | f ), upper contour set of f at y
Uα , upper-level set
v(p, m), indirect utility function
V , value function
w, wage (a vector with components wj );
wh, labor income(wage/hour)
x, quantity (vector)
xj (w, y), conditional factor demand for each input factor or good j
⌊x⌋, greatest integer function, floor of x
x, eigenvector of a matrix A; a point in R
x∗ , critical number, critical point (maximizer or minimizer)
x  y, componentwise inequality between vectors x and y
x ≻ y, strict componentwise inequality between vectors x and y
X, real normed space
X, exports
y, output;
Y , income
Yc , convex hull of Y ⊂ X
Z, imports
Z, set of integers
Z+ , set of nonnegative integers
δf (x, h), Gateaux differential (or G-differential) of f at x and h real
λ, λ Lagrange multiplier(s)
µ, µ Lagrange multiplier(s); also measure, Lebesgue measure
π, profit
ρ, rank of a matrix; ρ(A), rank of the matrix A; correlation coefficient
Σ, σ-algebra
τ , labor; also, time spent for leisure
χK (x) = 1 if x ∈ K; 0 if x ∈ / K, characteristic function defined on a convex
set K
k · k, norm
0, null (or zero) vector, = [0 0 . . . 0] in Rn
xxii NOTATIONS, DEFINITIONS, AND ACRONYMS

∂ ∂ ∂
∇, ‘del’ operator, ∇ = i + j + k , ((x, y, z) ∈ R3 ); an operator defined
∂x ∂y ∂z
∂ ∂
in Rn as ∇ = e1 + · · · + en
∂x1 ∂xn
∂f ∂f
∇f , gradient of a function f , a vector in R3 , defined by ∇ = i +j +
∂x ∂y
∂f ∂f ∂f
k ; a vector in Rn defined by ∇ = e1 + · · · + en for x =
∂z ∂x1 ∂xn
∂f ∂f
(x1 , . . . , xn ) ∈ Rn (dimension 1 × n), or by ∇ = e1 + · · · + en for
∂x1 ∂xn
x = (x1 , . . . , xn ) ∈ Rn (dimension n × 1)
∂2 ∂2
∇2 , Laplacian operator defined on Rn as + · · ·+ ; it is a linear elliptic
∂x21 ∂x2n
partial differential operator
∂2f ∂2f
∇2 f (x) = 2 + ··· + , x = (x1 , . . . , xn ) ∈ Rn , Laplacian of f (x); also
∂x1 ∂x2n
the trace of the Hessian matrix H
kxk1 , l1 -norm of a vector x
kxk2 , l2 -norm, or Euclidean norm, of a vector x
kxk∞ , l∞ -norm of a vector x
≻, , (subordination (predecessor): A  B, matrix inequality between ma-
trices A and B; A ≻ B, strict matrix inequality between matrices A and
B
≺, , subordination (successor) , e.g., f ≺ g is equivalent to f (0) = g(0) and
f (E) ⊂ g(E), where E is the open disks ; but here x ≺ y is used for
componentwise strict inequality, and x  y for componentwise inequality
between vectors x and y
(f ⊕ g)(z), = sup{f (x)g(y)}, where f and g are log-concave functions
x+y
x

(s ⊙ f )(x), = sf , where f is a log-concave function, and s > 0
s
n

n! n


k , binomial coefficient = k! (n − k)! = n−k
iso iso
= , isomorphic to; for example, A = B means A is isomorphic to B, and
conversely
 end of a proof, or an example
!!! attention symbol
1
Matrix Algebra

Some basic concepts and results from linear and matrix algebra, and from
finite-dimensional vector spaces are presented. Proofs for most of the results
can be found in many books, for example, Bellman [1970], Halmos [1958],
Hoffman and Kunze [1961] Lipschutz [1968], and Michel and Herget [2007].

1.1 Definitions
A matrix A is a rectangular array of elements (numbers, parameters, or vari-
ables), where the elements in a horizontal line are called rows, and those in
a vertical line columns. The dimension of a matrix is defined by the number
of rows m and the number of columns n, and we say that such a matrix has
dimension m × n, or simply that the matrix is m × n. If m = n, then we have
a square matrix. If the matrix is 1 × n, we call it a row vector, and if the
matrix is m × 1, then it is called a column vector. A matrix that converts the
rows of a matrix A to columns and the columns of A to rows is called the
transpose of A and is denoted by AT .
Let two 3 × 3 matrices A and B be defined as
   
a11 a12 a13 b11 b12 b13
A =  a21 a22 a23  , B =  b21 b22 b23  . (1.1.1)
a31 a32 a33 b31 b32 b33

Then, for example,

 
a11 a21 a31
AT =  a12 a22 a32  ,
a13 a23 a33

and similarly for BT . For addition (or subtraction) of two matrices (A + B,

or A − B) the two matrices A and B must be of equal dimension. Each
element of one matrix (B) is added to (or subtracted from) the corresponding
element of the other matrix (A). Thus, the element b11 in B is added to (or
2 1 MATRIX ALGEBRA

subtracted from) a11 in A; b12 to (or from) a12 , and so on. Multiplication of
a matrix by a number or scalar involves multiplication of each element of the
matrix by the scalar, and it is called scalar multiplication, since it scales the
matrix up or down by the size of the scalar.
A row vector A and a column vector B are written, respectively, as
 
b11
A = [ a11 a12 a13 ]1×3 , B =  b21  .
b31 3×1

However, to save space, B is often written as its transpose, i.e.,

T
B = [ b11 b21 b31 ] .

Multiplication of a row vector A by a column vector B requires that each

vector has the same number of elements. This multiplication is then carried
out by multiplying each element of the row vector by its corresponding element
in the column vector and summing the product. Thus,
T
AB = [ a11 a12 a13 ]1×3 × [ b11 b21 b31 ]3×1
= [a11 b11 + a12 b21 + a13 b31 ]1×1 .

The above technique of multiplication of a row and a column vector is used

to obtain the multiplication of any two vectors with a precondition that the
number of rows and columns of one matrix must be the same as the number
of columns and rows of the other matrix. Then the two matrices are said to
be conformable for multiplication. Thus, an m × n matrix can be multiplied
by another n × m matrix, and the resulting matrix will be m × m.
Example 1.1. Given
 
  5 13  
3 6 11 1 4 7
A= , B = 7 8  , E= ,
12 8 5 2 4 9
2×3 9 10 3×2 2×3

the matrices A and B, and B and E are conformable for multiplication, but
A and C are not conformable. Thus,
   
3 · 5 + 6 · 7 + 11 · 9 3 · 13 + 6 · 8 + 11 · 10 156 97
AB = = ,
12 · 5 + 8 · 7 + 5 · 9 12 · 13 + 8 · 8 + 5 · 10 161 270 2×2
   
5 · 1 + 13 · 2 5 · 4 + 13 · 4 5 · 7 + 13 × 9 31 72 152
BE =  7 · 1 + 8 · 2 7·4+8·4 7 · 7 + 8 × 9  =  23 60 121  .
9 · 1 + 10 · 2 9 · 4 + 10 · 4 9 · 7 + 10 × 9 29 76 153 3×3
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latter decreased abruptly in frequency and locked on to the first
subharmonic. As the stimulus frequency was further increased, the
pacemaker frequency would increase, then skip to the next
harmonic, then increase again, etc. This type of behavior was
observed by Moore et al. (23) in Aplysia and reported at the San
Diego Symposium for Biomedical Electronics shortly after it was
observed by the author in the electronic model.
Thus, we have shown that an electronic analog with all
parameters except membrane capacitance fixed at values close to
those of Hodgkin and Huxley, can provide all of the normal threshold
or axonal behavior and also all of the subthreshold somatic and
dendritic behavior outlined on page 7. Whether or not this is of
physiological significance, it certainly provides a unifying basis for
construction of electronic neural analogs. Simple circuits, based on
the Hodgkin-Huxley model and providing all of the aforementioned
behavior, have been constructed with ten or fewer inexpensive
transistors with a normal complement of associated circuitry (18). In
the near future we hope to utilize several models of this type to help
assess the information-processing capabilities not only of individual
neurons but also of small groups or networks of neurons.

REFERENCES
1. Hagiwara, S., and Bullock, T. H.
“Intracellular Potentials in Pacemaker and Integrative Neurons
of the Lobster Cardiac Ganglion,”
J. Cell and Comp. Physiol. 50 (No. 1):25-48 (1957)
2. Chalazonitis, N., and Arvanitaki, A.,
“Slow Changes during and following Repetitive Synaptic
Activation in Ganglion Nerve Cells,”
Bull. Inst. Oceanogr. Monaco No. 1225:1-23 (1961)
3. Hodgkin, A. L., Huxley, A. F., and Katz, B.,
“Measurement of Current-Voltage Relations in the Membrane
of the Giant Axon of Loligo,”
 J. Physiol. 116:424-448 (1952)
4. Hagiwara, S., and Saito, N.,
“Voltage-Current Relations in Nerve Cell Membrane of
Onchidium verruculatum,”
J. Physiol. 148:161-179 (1959)
5. Hagiwara, S., and Saito, N.,
“Membrane Potential Change and Membrane Current in
Supramedullary Nerve Cell of Puffer,”
J. Neurophysiol. 22:204-221 (1959)
6. Hagiwara, S.,
“Current-Voltage Relations of Nerve Cell Membrane,”
“Electrical Activity of Single Cells,”
Igakushoin, Hongo, Tokyo (1960)
7. Bullock, T. H.,
“Parameters of Integrative Action of the Nervous System at
the Neuronal Level,”
Experimental Cell Research Suppl. 5:323-337 (1958)
8. Otani, T., and Bullock, T. H.,
“Effects of Presetting the Membrane Potential of the Soma of
Spontaneous and Integrating Ganglion Cells,”
Physiological Zoology 32 (No. 2):104-114 (1959)
9. Bullock, T. H., and Terzuolo, C. A.,
“Diverse Forms of Activity in the Somata of Spontaneous and
Integrating Ganglion Cells,”
J. Physiol. 138:343-364 (1957)
10. Bullock, T. H.,
“Neuron Doctrine and Electrophysiology,”
Science 129 (No. 3355):997-1002 (1959)
11. Chalazonitis, N., and Arvanitaki, A.,
“Slow Waves and Associated Spiking in Nerve Cells of Aplysia,”
Bull. Inst. Oceanogr. Monaco No. 1224:1-15 (1961)
12. Bullock, T. H.,
 “Properties of a Single Synapse in the Stellate Ganglion of
Squid,”
J. Neurophysiol. 11:343-364 (1948)
13. Bullock, T. H.,
“Neuronal Integrative Mechanisms,”
“Recent Advances in Invertebrate Physiology,”
Scheer, B. T., ed., Eugene, Oregon:Univ. Oregon Press 1957
14. Hodgkin, A. L., and Huxley, A. F.,
“Currents Carried by Sodium and Potassium Ions through the
Membrane of the Giant Axon of Loligo,”
J. Physiol. 116:449-472 (1952)
15. Hodgkin, A. L., and Huxley, A. F.,
“The Components of Membrane Conductance in the Giant
Axon of Loligo,”
J. Physiol. 116:473-496 (1952)
16. Hodgkin, A. L., and Huxley, A. F.,
“The Dual Effect of Membrane Potential on Sodium
Conductance in the Giant Axon of Loligo,”
J. Physiol. 116:497-506 (1952)
17. Hodgkin, A. L., and Huxley, A. F.,
“A Quantitative Description of Membrane Current and its
Application to Conduction and Excitation in Nerve,”
J. Physiol. 117:500-544 (1952)
18. Lewis, E. R.,
“An Electronic Analog of the Neuron Based on the Dynamics of
Potassium and Sodium Ion Fluxes,”
“Neural Theory and Modeling,”
R. F. Reiss, ed., Palo Alto, California:Stanford University
Press, 1964
19. Eccles, J. C.,
Physiology of Synapses,
Berlin:Springer-Verlag, 1963
20. Grundfest, H.,
 “Excitation Triggers in Post-Junctional Cells,”
“Physiological Triggers,”
T. H. Bullock, ed., Washington, D.C.:American Physiological
Society, 1955
21. Rall, W.,
“Membrane Potential Transients and Membrane Time
Constants of Motoneurons,”
Exp. Neurol. 2:503-532 (1960)
22. Araki, T., and Otani, T.,
“The Response of Single Motoneurones to Direct Stimulation,”
J. Neurophysiol. 18:472-485 (1955)
23. Moore, G. P., Perkel, D. H., and Segundo, J. P.,
“Stability Patterns in Interneuronal Pacemaker Regulation,”
Proceedings of the San Diego Symposium for Biomedical
Engineering,
San Diego, California, 1963
24. Eccles, J. C.,
The Neurophysiological Basis of Mind,
Oxford:Clarendon Press, 1952
 Fields and Waves in Excitable
Cellular Structures
R. M. STEWART
Space General Corporation
El Monte, California

“Study of living processes by the physiological

method only proceeded laboriously behind the study of
non-living systems. Knowledge about respiration, for
instance, began to become well organized as the study
of combustion proceeded, since this is an analogous
operation....”

J. Z. Young (24)

INTRODUCTION
The study of electrical fields in densely-packed cellular media is
prompted primarily by a desire to understand more fully the details
of brain mechanism and its relation to behavior. Our work has
specifically been directed toward an attempt to model such
structures and mechanisms, using relatively simple inorganic
materials.
The prototype for such experiments is the “Lillie[1] iron-wire
nerve model.” Over a hundred years ago, it had been observed that
visible waves were produced on the surface of a piece of iron
submerged in nitric acid when and where the iron is touched by a
piece of zinc. After a short period of apparent fatigue, the wire
recovers and can again support a wave when stimulated. Major
support for the idea that such impulses are in fact directly related to
peripheral nerve impulses came from Lillie around 1920. Along an
entirely different line, various persons have noted the morphological
and dynamic similarity of dendrites in brain and those which
sometimes grow by electrodeposition of metals from solution.
Gordon Pask (17), especially, has pointed to this similarity and has
discussed in a general way the concomitant possibility of a physical
model for the persistent memory trace.
By combining and extending such concepts and techniques, we
hope to produce a macroscopic model of “gray matter,” the structural
matrix of which will consist of a dense, homogeneously-mixed,
conglomerate of small pellets, capable of supporting internal waves
of excitation, of changing electrical behavior through internal fine-
structure growth, and of forming temporal associations in response
to peripheral shocks.
A few experimenters have subsequently pursued the iron-wire
nerve-impulse analogy further, hoping thereby to illuminate the
mechanisms of nerve excitation, impulse transmission and recovery,
but interest has generally been quite low. It has remained fairly
undisturbed in the text books and lecture demonstrations of medical
students, as a picturesque aid to their formal education. On the
outer fringes of biology, still less interest has been displayed; the
philosophical vitalists would surely be revolted by the idea of such
models of mind and memory, and at the other end of the scale,
contemporary computer engineers generally assume that a nerve
cell operates much too slowly to be of any value. This lack of
interest is certainly due, in part, to success in developing techniques
of monitoring individual nerve fibers directly to the point that it is
just about as easy to work with large nerve fibers (and even
peripheral and spinal junctions) as it is to work with iron wires.
Under such circumstances, the model has only limited value,
perhaps just to the extent that it emphasizes the role of factors
other than specific molecular structure and local chemical reactions
in the dynamics of nerve action.
 When we leave the questions of impulse transmission on long
fibers and peripheral junctions, however, and attempt to discuss the
brain, there can be hardly any doubt that the development of a
meaningful physical model technique would be of great value. Brain
tissue is soft and sensitive, the cellular structures are small, tangled,
and incredibly numerous. Therefore (Young (24)), “ ... physiologists
hope that after having learned a lot about nerve-impulses in the
nerves they will be able to go on to study how these impulses
interact when they reach the brain. [But], we must not assume that
we shall understand the brain only in the terms we have learned to
use for the nerves. The function of nerves is to carry impulses—like
telegraph wires. The functions of brains is something else.” But,
confronted with such awesome experimental difficulties, with no
comprehensive mathematical theory in sight, we are largely limited
otherwise to verbal discourses, rationales and theorizing, a
hopelessly clumsy tool for the development of an adequate
understanding of brain function. A little over ten years ago Sperry
(19) said, “Present day science is quite at a loss even to begin to
describe the neural events involved in the simplest form of mental
activity.” This situation has not changed much today. The
development, study, and understanding of complex high-density
cellular structures which incorporate characteristics of both the Lillie
and Pask models may, it is hoped, alleviate this situation. There
would also be fairly obvious technological applications for such
techniques if highly developed and which, more than any other
consideration, has prompted support for this work.
Experiments to date have been devised which demonstrate the
following basic physical functional characteristics:
(1) Control of bulk resistivity of electrolytes
containing closely-packed, poorly-conducting
pellets
(2) Circulation of regenerative waves on closed
loops
 (3) Strong coupling between isolated excitable
sites
(4) Logically-complete wave interactions,
including facilitation and annihilation
(5) Dendrite growth by electrodeposition in
“closed” excitable systems
(6) Subthreshold distributed field effects,
especially in locally-refractory regions.
In addition, our attention has necessarily been directed to various
problems of general experimental technique and choice of materials,
especially as related to stability, fast recovery and long life. However,
in order to understand the possible significance of, and motivation
for such experiments, some related modern concepts of
neurophysiology, histology and psychology will be reviewed very
briefly. These concepts are, respectively:

(1) Cellular structure in the central nervous system

(2) Short-term or “ephemeral” memory
(3) The synapse
(4) Inhibition
(5) Long-term memory traces or engram
(6) Spatially-diffuse temporal association and learning.

SOME CONTEMPORARY CONCEPTS

Since we are attempting to duplicate processes other than
chemical, per se, we will forego any reference to the extensive
literature of neurochemistry. It should not be surprising though if, at
the neglect of the fundamental biological processes of growth,
reproduction and metabolism, it proves possible to imitate some
learning mechanisms with grossly less complex molecular structures.
There is also much talk of chemical versus electrical theories and
mechanisms in neurophysiology. The distinction, when it can be
made, seems to hinge on the question of the scale of size of
significant interactions. Thus, “chemical” interactions presumably
take place at molecular distances, possibly as a result of or
subsequent to a certain amount of thermal diffusion. “Electrical”
interactions, on the other hand, are generally understood to imply
longer range or larger scale macroscopic fields.

1. Cellular Structure

The human brain contains approximately 10¹⁰ neurons to which

the neuron theory assigns the primary role in central nervous
activity. These cells occupy, however, a relatively small fraction of the
total volume. There are, for example, approximately 10 times that
number of neuroglia, cells of relatively indeterminate function. Each
neuron (consisting of cell body, dendrites and, sometimes, an axon)
comes into close contact with the dendrites of other neurones at
some thousands of places, these synapses and “ephapses” being
spaced approximately 5μ apart (1). The total number of such
apparent junctions is therefore of the order of 10¹³. In spite of
infinite fine-structure variations when viewed with slightly blurred
vision, the cellular structure of the brain is remarkably
homogeneous. In the cortex, at least, the extensions of most cells
are relatively short, and when the cortex is at rest, it appears from
the large EEG alpha-rhythms that large numbers of cells beat
together in unison. Quoting again from Sperry, “In short, current
brain theory encourages us to try to correlate our subjective psychic
experience with the activity of relatively homogeneous nerve cell
units conducting essentially homogeneous impulses, through roughly
homogeneous cerebral tissue.”

2. Short-Term Memory

A train of impulses simply travelling on a long fiber may, for

example, be regarded as a short-term memory much in the same
way as a delay line acts as a transient memory in a computer. A
similar but slightly longer term memory may also be thought of to
exist in the form of waves circulating in closed loops (23). In fact, it
is almost universally held today that most significant memory occurs
in two basic interrelated ways. First of all, such a short-term
circulating, reverberatory or regenerative memory which, however,
could not conceivably persist through such things as coma,
anesthesia, concussion, extreme cold, deep sleep and convulsive
seizures and thus, secondly, a long-term memory trace which must
somehow reside in a semipermanent fine-structural change. As Hebb
(9) stated, “A reverbratory trace might cooperate with a structural
change and carry the memory until the growth change is made.”

3. The Synapse

The current most highly regarded specific conception of the

synapse is largely due to and has been best described by Eccles (5):
“ ... the synaptic connections between nerve cells are the only
functional connections of any significance. These synapses are of
two types, excitatory and inhibitory, the former type tending to make
nerve cells discharge impulses, the other to suppress the discharge.
There is now convincing evidence that in vertebrate synapses each
type operates through specific chemical transmitter substances ...”.
In response to a presentation by Hebb (10), Eccles was quoted as
saying, “One final point, and that is if there is electrical interaction,
and we have seen from Dr. Estable’s work the complexity of
connections, and we now know from the electronmicroscopists that
there is no free space, only 200 Å clefts, everywhere in the central
nervous system, then everything should be electrically interacted
with everything else. I think this is only electrical background noise
and, that when we lift with specific chemical connections above that
noise we get a significant operational system. I would say that there
is electrical interaction but it is just a noise, a nuisance.” Eccles’
conclusions are primarily based on data obtained in the peripheral
nervous system and the spinal cord. But there is overwhelming
reason to expect that cellular interactions in the brain are an entirely
different affair. For example, “The highest centres in the octopus, as
in vertebrates and arthropods, contain many small neurons. This
finding is such a commonplace, that we have perhaps failed in the
past to make the fullest inquiry into its implications. Many of these
small cells possess numerous processes, but no axon. It is difficult to
see, therefore, that their function can be conductive in the ordinary
sense. Most of our ideas about nervous functioning are based on the
assumption that each neuron acts essentially as a link in some chain
of conduction, but there is really no warrant for this in the case of
cells with many short branches. Until we know more of the relations
of these processes to each other in the neuropile it would be unwise
to say more. It is possible that the effective part of the discharge of
such cells is not as it is in conduction in long pathways, the internal
circuit that returns through the same fiber, but the external circuit
that enters other processes, ...” (3).

4. Inhibition

The inhibitory chemical transmitter substance postulated by

Eccles has never been detected in spite of numerous efforts to do
so. The mechanism(s) of inhibition is perhaps the key to the
question of cellular interaction and, in one form or another, must be
accounted for in any adequate theory.
Other rather specific forms of excitation and inhibition interaction
have been proposed at one time or another. Perhaps the best
example is the polar neuron of Gesell (8) and, more recently, Retzlaff
(18). In such a concept, excitatory and inhibitory couplings differ
basically because of a macroscopic structural difference at the
cellular level; that is, various arrangements or orientation of intimate
cellular structures give rise to either excitation or inhibition.

5. Long-Term Memory

Most modern theories of semipermanent structural change (or

engrams, as they are sometimes called) look either to the molecular
level or to the cellular level. Various specific locales for the engram
have been suggested, including (1) modifications of RNA molecular
structure, (2) changes of cell size, synapse area or dendrite
extensions, (3) neuropile modification, and (4) local changes in the
cell membrane. There is, in fact, rather direct evidence of the growth
of neurons or their dendrites with use and the diminution or atrophy
of dendrites with disuse. The apical dendrite of pyramidal neurones
becomes thicker and more twisted with continuing activity, nerve
fibers swell when active, sprout additional branches (at least in the
spinal cord) and presumably increase the size and number of their
terminal knobs. As pointed out by Konorski (11), the morphological
conception of plasticity according to which plastic changes would be
related to the formation and multiplication of new synaptic junctions
goes back at least as far as Ramon y Cajal in 1904. Whatever the
substrate of the memory trace, it is, at least in adults, remarkably
immune to extensive brain damage and as Young (24) has said: “ ...
this question of the nature of the memory trace is one of the most
obscure and disputed in the whole of biology.”

6. Field Effects and Learning

First, from Boycott and Young (3), “The current conception, on

which most discussions of learning still concentrate, is that the
nervous system consists essentially of an aggregate of chains of
conductors, linked at key points by synapses. This reflex conception,
springing probably from Cartesian theory and method, has no doubt
proved of outstanding value in helping us to analyse the actions of
the spinal cord, but it can be argued that it has actually obstructed
the development of understanding of cerebral function.”
Most observable evidence of learning and memory is extremely
complex and its interpretation full of traps. Learning in its broadest
sense might be detected as a semipermanent change of behavior
pattern brought about as a result of experience. Within that kind of
definition, we can surely identify several distinctly different types of
learning, presumably with distinctly different kinds of mechanisms
associated with each one. But, if we are to stick by our definition of
a condition of semipermanent change of behavior as a criterion for
learning, then we may also be misled into considering the
development of a neurosis, for example, as learning, or even a deep
coma as learning.
When we come to consider field effects, current theories tend to
get fairly obscure, but there seems to be an almost universal
recognition of the fact that such fields are significant. For example,
Morrell (16) says in his review of electrophysiological contributions to
the neural basis of learning, “A growing body of knowledge (see
reviews by Purpura, Grundfest, and Bishop) suggests that the most
significant integrative work of the central nervous system is carried
on in graded response elements—elements in which the degree of
reaction depends upon stimulus intensity and is not all-or-none,
which have no refractory period and in which continuously varying
potential changes of either sign occur and mix and algebraically
sum.” Gerard (7) also makes a number of general comments along
these lines. “These attributes of a given cell are, in turn, normally
controlled by impulses arising from other regions, by fields
surrounding them—both electric and chemical—electric and chemical
fields can strongly influence the interaction of neurones. This has
been amply expounded in the case of the electric fields.”
Learning situations involving “punishment” and “reward” or,
subjectively, “pain” and “pleasure” may very likely be associated with
transient but structurally widespread field effects. States of distress
and of success seem to exert a lasting influence on behavior only in
relation to simultaneous sensory events or, better yet, sensory
events just immediately preceding in time. For example, the
“anticipatory” nature of a conditioned reflex has been widely noted
(21). From a structural point of view, it is as if recently active sites
regardless of location or function were especially sensitive to
extensive fields. There is a known inherent electrical property of
both nerve membrane and passive iron surface that could hold the
answer to this mechanism of spatially-diffuse temporal association;
namely, the surface resistance drops to less than 1 per cent of its
resting value during the refractory period which immediately follows
activation.

EXPERIMENTAL TECHNIQUE
In almost all experiments, the basic signal-energy mechanism
employed has been essentially that one studied most extensively by
Lillie (12), Bonhoeffer (2), Yamagiwa (22), Matumoto and Goto (14)
and others, i.e., activation, impulse propagation and recovery on the
normally passive surface of a piece of iron immersed in nitric acid or
of cobalt in chromic acid (20). The iron we have used most
frequently is of about 99.99% purity, which gives performance more
consistent than but similar to that obtained using cleaned “coat-
hanger” wires. The acid used most frequently by us is about 53-55%
aqueous solution by weight, substantially more dilute than that
predominantly used by previous investigators. The most frequently
reported concentration has been 68-70%, a solution which is quite
stable and, hence, much easier to work with in open containers than
the weaker solutions, results in very fast waves but gives, at room
temperatures, a very long refractory period (typically, 15 minutes). A
noble metal (such as silver, gold or platinum) placed in contact with
the surface of the iron has a stabilizing effect (14) presumably
through the action of local currents and provides a simple and useful
technique whereby, with dilution, both stability and fast recovery (1
second) can be achieved in simple demonstrations and experiments.
Experiments involving the growth by electrodeposition and study
of metallic dendrites are done with an eye toward electrical, physical
and chemical compatibility with the energy-producing system
outlined above. Best results to date (from the standpoints of
stability, non-reactivity, and morphological similarity to neurological
structures) have been obtained by dissolving various amounts of
gold chloride salt in 53-55% HNO₃.
An apparatus has been devised and assembled for the purpose of
containing and controlling our primary experiments. (See Figure 1).
Its two major components are a test chamber (on the left in Figure
1) and a fluid exchanger (on the right). In normal operation the test
chamber, which is very rigid and well sealed after placing the
experimental assembly inside, is completely filled with electrolyte (or,
initially, an inert fluid) to the exclusion of all air pockets and bubbles.
Thus encapsulated, it is possible to perform experiments which
would otherwise be impossible due to instability. The instability
which plagues such experiments is manifested in copious generation
of bubbles on and subsequent rapid disintegration of all “excitable”
material (i.e., iron). Preliminary experiments indicated that such
“bubble instability” could be suppressed by constraining the volume
available to expansion. In particular, response and recovery times
can now be decreased substantially and work can proceed with
complex systems of interest such as aggregates containing many
small iron pellets.
The test chamber is provided with a heater (and thermostatic
control) which makes possible electrochemical impulse response and
recovery times comparable to those of the nervous system (1 to 10
msec). The fluid-exchanger is so arranged that fluid in the test
chamber can be arbitrarily changed or renewed by exchange within
a rigid, sealed, completely liquid-filled (“isochoric”) loop. Thus,
stability can be maintained for long periods of time and over a wide
variety of investigative or operating conditions.
Most of the parts of this apparatus are made of stainless steel
and are sealed with polyethylene and teflon. There is a small quartz
observation window on the test chamber, two small lighting ports, a
pressure transducer, thermocouple, screw-and-piston pressure
actuator and umbilical connector for experimental electrical inputs
and outputs.

BASIC EXPERIMENTS
The basic types of experiments described in the following
sections are numbered for comparison to correspond roughly to
related neurophysiological concepts summarized in the previous
section.

1. Cellular Structure

The primary object of our research is the control and

determination of dynamic behavior in response to electrical
stimulation in close-packed aggregates of small pellets submerged in
electrolyte. Typically, the aggregate contains (among other things)
iron and the electrolyte contains nitric acid, this combination making
possible the propagation of electrochemical surface waves of
excitation through the body of the aggregate similar to those of the
Lillie iron-wire nerve model. The iron pellets are imbedded in and
supported by a matrix of small dielectric (such as glass) pellets.
Furthermore, with the addition of soluble salts of various noble
metals to the electrolyte, long interstitial dendritic or fibrous
structures of the second metal can be formed whose length and
distribution change by electrodeposition in response to either
internal or externally generated fields.
Figure 1—Test chamber and
fluid exchanger
 Coupling between isolated excitable (iron) sites is greatly affected
by the fine structure and effective bulk resistivity of the glass and
fluid medium which supports and fills the space between such sites.
In general (see Section 3, following) it is necessary, to promote
strong coupling between small structures, to impede the “short-
circuit” return flow of current from an active or excited surface,
through the electrolyte and back through the dendritic structure
attached to the same excitable site. This calls for control (increase)
of the bulk resistivity, preferably by means specifically independent
of electrolyte composition, which relates to and affects surface
phenomena such as recovery (i.e., the “refractory” period). Figure 2
illustrates the way in which this is being done, i.e., by appropriate
choice of particle size distributions. The case illustrated shows the
approximate proper volume ratios for maximum resistivity in a two-
size-phase random mixture of spheres.

2. Regenerative Loops

Figure 3 shows an iron loop (about 2-inch diameter) wrapped

with a silver wire helix which is quite stable in 53-55% acid and
which will easily support a circulating pattern of three impulses. For
demonstration, unilateral waves can be generated by first touching
the iron with a piece of zinc (which produces two oppositely
travelling waves) and then blocking one of them with a piece of
platinum or a small platinum screen attached to the end of a stick or
wand. Carbon blocks may also be used for this purpose.
The smallest regenerative or reverberatory loop which we are at
present able to devise is about 1 mm in diameter. Multiple waves, as
expected, produce stable patterns in which all impulses are equally
spaced. This phenomenon can be related to the slightly slower
speed characteristic of the relative refractory period as compared
with a more fully recovered zone.
Figure 2—Conductivity control—mixed pellet-size
aggregates
 Figure 3—Regenerative or reverberatory loop

3. Strong Coupling

If two touching pieces of iron are placed in a bath of nitric acid, a

wave generated on one will ordinarily spread to the other. As is to be
expected, a similar result is obtained if the two pieces are connected
through an external conducting wire. However, if they are isolated,
strong coupling does not ordinarily occur, especially if the elements
are small in comparison with a “critical size,” σ/ρ where σ is the
surface resistivity of passive iron surface (in Ω-cm²) and ρ is the
volume resistivity of the acid (in Ω-cm). A simple and informative
structure which demonstrates the essential conditions for strong
electrical coupling between isolated elements of very small size may
be constructed as shown in Figure 4. The dielectric barrier insures
that charge transfer through one dipole must be accompanied by an
equal and opposite transfer through the surfaces of the other dipole.
If the “inexcitable” silver tails have sufficiently high conductance
(i.e., sufficiently large surface area, hence preferably, dendrites),
strong coupling will occur, just as though the cores of the two pieces
of iron were connected with a solid conducting wire.
Figure 4
 Figure 5—Electrochemical excitatory-inhibitory
interaction cell

4. Inhibitory Coupling

If a third “dipole” is inserted through the dielectric membrane in

the opposite direction, then excitation of this isolated element tends
to inhibit the response which would otherwise be elicited by
excitation of one of the parallel dipoles. Figure 5 shows the first such
“logically-complete” interaction cell successfully constructed and
demonstrated. It may be said to behave as an elementary
McCulloch-Pitts neuron (15). Further analysis shows that similar
structures incorporating many dipoles (both excitatory and
inhibitory) can be made to behave as general “linear decision
functions” in which all input weights are approximately proportional
to the total size or length of their corresponding attached dendritic
structures.

5. Dendrite Growth

Figure 6 shows a sample gold dendrite grown by

electrodeposition (actual size, about 1 mm) from a 54% nitric acid
solution to which gold chloride was added. When such a dendrite is
attached to a piece of iron (both submerged), activation of the
excitable element produces a field in such a direction as to promote
further growth of the dendritic structure. Thus, if gold chloride is
added to the solution used in the elementary interaction cells
described above, all input influence “weights” tend to increase with
use and, hence, produce a plasticity of function.

6. Field Effects in Locally-Refractory Regions

Our measurements indicate that, during the refractory period

following excitation, the surface resistance of iron in nitric acid drops
to substantially less than 1% of its resting value in a manner
reminiscent of nerve membranes (4). Thus, if a distributed or gross
field exists at any time throughout a complex cellular aggregate,
concomitant current densities in locally-refractive regions will be
substantially higher than elsewhere and, if conditions appropriate to
dendrite growth exist (as described above) growth rates in such
regions will also be substantially higher than elsewhere. It would
appear that, as a result, recently active functional couplings (in
contrast to those not associated with recent neural activity) should
be significantly altered by widely distributed fields or massive
peripheral shocks. This mechanism might thus explain the apparent
ability of the brain to form specific temporal associations in response
to spatially-diffuse effects such as are generated, for example, by
the pain receptors.

(a)
 (b)

Figure 6—Dendritic structures, living and

non-living. (a) Cat dendrite trees (from
Bok, “Histonomy of the Cerebral Cortex,”
Elsevier, 1959); (b) Electrodeposited gold
dendrite tree.

SUMMARY
An attempt is being made to develop meaningful electrochemical
model techniques which may contribute toward a clearer
understanding of cortical function. Two basic phenomena are
simultaneously employed which are variants of (1) the Lillie iron-wire
nerve model, and (2) growth of metallic dendrites by
electrodeposition. These phenomena are being induced particularly
within dense cellular aggregates of various materials whose
interstitial spaces are flooded with liquid electrolyte.

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