Bargaining for power and information : an experimental and theoretical analysis of the interaction between institutions, externalities and adverse selection

Bargaining is the building block of many economic interactions, ranging from bilateral to multilateral encounters and from situations in which the actors are individuals to negotiations between firms or countries. In all these settings, economists have been intrigued for a long time by the fact that some projects, trades or agreements are not realized even though they are mutually beneficial. On the one hand, this has been explained by incomplete information. A firm may not be willing to offer a wage that is acceptable to a qualified worker, because it knows that there are also unqualified workers and cannot distinguish between the two types. This phenomenon is known as adverse selection. On the other hand, it has been argued that even with complete information, the presence of externalities may impede efficient outcomes. To see this, consider the example of climate change. If a subset of countries agrees to curb emissions, non-participant regions benefit from the signatories’ efforts without incurring costs. These free riding opportunities give rise to incentives to strategically improve ones bargaining power that work against the formation of a global agreement. This thesis is concerned with extending our understanding of both factors, adverse selection and externalities. The findings are based on empirical evidence from original laboratory experiments as well as game theoretic modeling. On a very general note, it is demonstrated that the institutions through which agents interact matter to a large extent. Insights are provided about which institutions we should expect to perform better than others, at least in terms of aggregate welfare. Chapters 1 and 2 focus on the problem of adverse selection. Effective operation of markets and other institutions often depends on good information transmission properties. In terms of the example introduced above, a firm is only willing to offer high wages if it receives enough positive signals about the worker’s quality during the application and wage bargaining process. In Chapter 1, it will be shown that repeated interaction coupled with time costs facilitates information transmission. By making the wage bargaining process costly for the worker, the firm is able to obtain more accurate information about the worker’s type. The cost could be pure time cost from delaying agreement or cost of effort arising from a multi-step interviewing process. In Chapter 2, I abstract from time cost and show that communication can play a similar role. The simple fact that a worker states to be of high quality may be informative. In Chapter 3, the focus is on a different source of inefficiency. Agents strive for bargaining power and thus may be motivated by incentives that are at odds with the socially efficient outcome. I have already mentioned the example of climate change. Other examples are coalitions within committees that are formed to secure voting power to block outcomes or groups that commit to different technological standards although a single standard would be optimal (e.g. the format war between HD and BlueRay). It will be shown that such inefficiencies are directly linked to the presence of externalities and a certain degree of irreversibility in actions. I now discuss the three articles in more detail. In Chapter 1, Olivier Bochet and I study a simple bilateral bargaining institution that eliminates trade failures arising from incomplete information. In this setting, a buyer makes offers to a seller in order to acquire a good. Whenever an offer is rejected by the seller, the buyer may submit a further offer. Bargaining is costly, because both parties suffer a (small) time cost after any rejection. The difficulties arise, because the good can be of low or high quality and the quality of the good is only known to the seller. Indeed, without the possibility to make repeated offers, it is too risky for the buyer to offer prices that allow for trade of high quality goods. When allowing for repeated offers, however, at equilibrium both types of goods trade with probability one. We provide an experimental test of these predictions. Buyers gather information about sellers using specific price offers and rates of trade are high, much as the model’s qualitative predictions. We also observe a persistent over-delay before trade occurs, and this mitigates efficiency substantially. Possible channels for over-delay are identified in the form of two behavioral assumptions missing from the standard model, loss aversion (buyers) and haggling (sellers), which reconcile the data with the theoretical predictions. Chapter 2 also studies adverse selection, but interaction between buyers and sellers now takes place within a market rather than isolated pairs. Remarkably, in a market it suffices to let agents communicate in a very simple manner to mitigate trade failures. The key insight is that better informed agents (sellers) are willing to truthfully reveal their private information, because by doing so they are able to reduce search frictions and attract more buyers. Behavior observed in the experimental sessions closely follows the theoretical predictions. As a consequence, costless and non-binding communication (cheap talk) significantly raises rates of trade and welfare. Previous experiments have documented that cheap talk alleviates inefficiencies due to asymmetric information. These findings are explained by pro-social preferences and lie aversion. I use appropriate control treatments to show that such consideration play only a minor role in our market. Instead, the experiment highlights the ability to organize markets as a new channel through which communication can facilitate trade in the presence of private information. In Chapter 3, I theoretically explore coalition formation via multilateral bargaining under complete information. The environment studied is extremely rich in the sense that the model allows for all kinds of externalities. This is achieved by using so-called partition functions, which pin down a coalitional worth for each possible coalition in each possible coalition structure. It is found that although binding agreements can be written, efficiency is not guaranteed, because the negotiation process is inherently non-cooperative. The prospects of cooperation are shown to crucially depend on i) the degree to which players can renegotiate and gradually build up agreements and ii) the absence of a certain type of externalities that can loosely be described as incentives to free ride. Moreover, the willingness to concede bargaining power is identified as a novel reason for gradualism. Another key contribution of the study is that it identifies a strong connection between the Core, one of the most important concepts in cooperative game theory, and the set of environments for which efficiency is attained even without renegotiation.

Lower complexity bounds in justification logic

Justification Logic studies epistemic and provability phenomena by introducing justifications/proofs into the language in the form of justification terms. Pure justification logics serve as counterparts of traditional modal epistemic logics, and hybrid logics combine epistemic modalities with justification terms. The computational complexity of pure justification logics is typically lower than that of the corresponding modal logics. Moreover, the so-called reflected fragments, which still contain complete information about the respective justification logics, are known to be in~NP for a wide range of justification logics, pure and hybrid alike. This paper shows that, under reasonable additional restrictions, these reflected fragments are NP-complete, thereby proving a matching lower bound. The proof method is then extended to provide a uniform proof that the corresponding full pure justification logics are $\Pi^p_2$-hard, reproving and generalizing an earlier result by Milnikel.

Prognostic value of the Geneva prediction rule in patients with pulmonary embolism

BACKGROUND Assessment of pre-test probability of pulmonary embolism (PE) and prognostic stratification are two widely recommended steps in the management of patients with suspected PE. Some items of the Geneva prediction rule may have a prognostic value. We analyzed whether the initial probability assessed by the Geneva rule was associated with the outcome of patients with PE. METHODS In a post-hoc analysis of a multicenter trial including 1,693 patients with suspected PE, the all-cause death or readmission rates during the 3-month follow-up of patients with confirmed PE were analyzed. PE probability group was prospectively assessed by the revised Geneva score (RGS). Similar analyses were made with the a posteriori-calculated simplified Geneva score (SGS). RESULTS PE was confirmed in 357 patients and 21 (5.9%) died during the 3-month follow-up. The mortality rate differed significantly with the initial RGS group, as with the SGS group. For the RGS, the mortality increased from 0% (95% Confidence Interval: [0-5.4%]) in the low-probability group to 14.3% (95% CI: [6.3-28.2%]) in the high-probability group, and for the SGS, from 0% (95% CI: [0-5.4%] to 17.9% (95% CI: [7.4-36%]). Readmission occurred in 58 out of the 352 patients with complete information on readmission (16.5%). No significant change of readmission rate was found among the RGS or SGS groups. CONCLUSIONS Returning to the initial PE probability evaluation may help clinicians predict 3-month mortality in patients with confirmed PE. (ClinicalTrials.gov: NCT00117169).

Evaluation of the success of medical management for presumptive cervical intervertebral disk herniation in dogs.

OBJECTIVE To determine the success of medical management of presumptive cervical disk herniation in dogs and variables associated with treatment outcome. DESIGN Retrospective case series. ANIMALS Dogs (n=88) with presumptive cervical disk herniation. METHODS Dogs with presumptive cervical and thoracolumbar disk herniation were identified from medical records at 2 clinics and clients were mailed a questionnaire related to the success of therapy, clinical recurrence of signs, and quality of life (QOL) as interpreted by the owner. Signalment, duration and degree of neurologic dysfunction, and medication administration were determined from medical records. RESULTS Ninety-seven percent of dogs (84/87) with complete information were described as ambulatory at initial evaluation. Successful treatment was reported for 48.9% of dogs with 33% having recurrence of clinical signs and 18.1% having therapeutic failure. Bivariable logistic regression showed that non-steroidal anti-inflammatory drug (NSAID) administration was associated with success (P=.035; odds ratio [OR]=2.52). Duration of cage rest and glucocorticoid administration were not significantly associated with success or QOL. Dogs with less-severe neurologic dysfunction were more likely to have a successful outcome (OR=2.56), but this association was not significant (P=.051). CONCLUSIONS Medical management can lead to an acceptable outcome in many dogs with presumptive cervical disk herniation. Based on these data, NSAIDs should be considered as part of the therapeutic regimen. Cage rest duration and glucocorticoid administration do not appear to benefit these dogs, but this should be interpreted cautiously because of the retrospective data collection and use of client self-administered questionnaire follow-up. CLINICAL RELEVANCE These results provide insight into the success of medical management for presumptive cervical disk herniation in dogs and may allow for refinement of treatment protocols.

[Role of coronary artery bypass grafting in the treatment of coronary artery disease - a well-balanced information of the patients and objective decision making are welcome]

Most recently discussion about the optimal treatment for different subsets of patients suffering from coronary artery disease has re-emerged, mainly because of the uncertainty caused by doctors and patients regarding the phenomenon of unpredictable early and late stent thrombosis. Surgical revascularization using multiple arterial bypass grafts has repeatedly proven its superiority compared to percutaneous intervention techniques, especially in patients suffering from left main stem disease and coronary 3-vessels disease. Several prospective randomized multicenter studies comparing early and mid-term results following PCI and CABG have been really restrictive, with respect to patient enrollment, with less than 5% of all patients treated during the same time period been enrolled. Coronary artery bypass grafting allows the most complete revascularization in one session, because all target coronary vessels larger than 1 mm can be bypassed in their distal segments. Once the patient has been turn-off for surgery, surgeons have to consider the most complete arterial revascularization in order to decrease the long-term necessity for re-revascularization; for instance patency rate of the left internal thoracic artery grafted to the distal part left anterior descending artery may be as high as 90-95% after 10 to 15 years. Early mortality following isolated CABG operation has been as low as 0.6 to 1% in the most recent period (reports from the University Hospital Berne and the University Hospital of Zurich); beside these excellent results, the CABG option seems to be less expensive than PCI with time, since the necessity for additional PCI is rather high following initial PCI, and the price of stent devices is still very high, particularly in Switzerland. Patients, insurance and experts in health care should be better and more honestly informed concerning the risk and costs of PCI and CABG procedures as well as about the much higher rate of subsequent interventions following PCI. Team approach for all patients in whom both options could be offered seems mandatory to avoid unbalanced information of the patients. Looking at the recent developments in transcatheter valve treatments, the revival of cardiological-cardiosurgical conferences seems to a good option to optimize the cooperation between the two medical specialties: cardiology and cardiac surgery.

Expanding the cone location and magnitude index to include corneal thickness and posterior surface information for the detection of keratoconus

PURPOSE To extend the capabilities of the Cone Location and Magnitude Index algorithm to include a combination of topographic information from the anterior and posterior corneal surfaces and corneal thickness measurements to further improve our ability to correctly identify keratoconus using this new index: ConeLocationMagnitudeIndex_X. DESIGN Retrospective case-control study. METHODS Three independent data sets were analyzed: 1 development and 2 validation. The AnteriorCornealPower index was calculated to stratify the keratoconus data from mild to severe. The ConeLocationMagnitudeIndex algorithm was applied to all tomography data collected using a dual Scheimpflug-Placido-based tomographer. The ConeLocationMagnitudeIndex_X formula, resulting from analysis of the Development set, was used to determine the logistic regression model that best separates keratoconus from normal and was applied to all data sets to calculate PercentProbabilityKeratoconus_X. The sensitivity/specificity of PercentProbabilityKeratoconus_X was compared with the original PercentProbabilityKeratoconus, which only uses anterior axial data. RESULTS The AnteriorCornealPower severity distribution for the combined data sets are 136 mild, 12 moderate, and 7 severe. The logistic regression model generated for ConeLocationMagnitudeIndex_X produces complete separation for the Development set. Validation Set 1 has 1 false-negative and Validation Set 2 has 1 false-positive. The overall sensitivity/specificity results for the logistic model produced using the ConeLocationMagnitudeIndex_X algorithm are 99.4% and 99.6%, respectively. The overall sensitivity/specificity results for using the original ConeLocationMagnitudeIndex algorithm are 89.2% and 98.8%, respectively. CONCLUSIONS ConeLocationMagnitudeIndex_X provides a robust index that can detect the presence or absence of a keratoconic pattern in corneal tomography maps with improved sensitivity/specificity from the original anterior surface-only ConeLocationMagnitudeIndex algorithm.

The Aeromonas salmonicida subsp. salmonicida exoproteome: determination of the complete repertoire of Type-Three Secretion System effectors and identification of other virulence factors

BACKGROUND Aeromonas salmonicida subsp. salmonicida, the etiologic agent of furunculosis, is a major pathogen of fisheries worldwide. Several virulence factors have been described, but the type-three secretion system (T3SS) is recognized as having a major effect on virulence by injecting effectors directly into fish cells. In this study we used high-throughput proteomics to display the differences between in vitro secretome of A. salmonicida wild-type (wt, hypervirulent, JF2267) and T3SS-deficient (isogenic ΔascV, extremely low-virulent, JF2747) strains in exponential and stationary phases of growth. RESULTS Results confirmed the secretion of effectors AopH, AexT, AopP and AopO via T3SS, and for the first time demonstrated the impact of T3SS in secretion of Ati2, AopN and ExsE that are known as effectors in other pathogens. Translocators, needle subunits, Ati1, and AscX were also secreted in supernatants (SNs) dependent on T3SS. AopH, Ati2, AexT, AopB and AopD were in the top seven most abundant excreted proteins. EF-G, EF-Tu, DnaK, HtpG, PNPase, PepN and MdeA were moderately secreted in wt SNs and predicted to be putative T3 effectors by bioinformatics. Pta and ASA_P5G088 were increased in wt SNs and T3-associated in other bacteria. Ten conserved cytoplasmic proteins were more abundant in wt SNs than in the ΔascV mutant, but without any clear association to a secretion system. T1-secreted proteins were predominantly found in wt SNs: OmpAI, OmpK40, DegQ, insulinase ASA_0716, hypothetical ASA_0852 and ASA_3619. Presence of T3SS components in pellets was clearly decreased by ascV deletion, while no impact was observed on T1- and T2SS. Our results demonstrated that the ΔascV mutant strain excreted well-described (VapA, AerA, AerB, GCAT, Pla1, PlaC, TagA, Ahe2, GbpA and enolase) and yet uncharacterized potential toxins, adhesins and enzymes as much as or even more than the wt strain. Other putative important virulence factors were not detected. CONCLUSIONS We demonstrated the whole in vitro secretome and T3SS repertoire of hypervirulent A. salmonicida. Several toxins, adhesins and enzymes that are not part of the T3SS secretome were secreted to a higher extent in the extremely low-virulent ΔascV mutant. All together, our results show the high importance of an intact T3SS to initiate the furunculosis and offer new information about the pathogenesis.

The Effect Of Misleading Prior Information On The Subjective Visual Vertical

When tilted sideways participants misperceive the visual vertical assessed by means of a luminous line in otherwise complete dark- ness. A recent modeling approach (De Vrijer et al., 2009) claimed that these typical patterns of errors (known as A- and E-effects) could be explained by as- suming that participants behave in a Bayes optimal manner. In this study, we experimentally manipulate participants’ prior information about body-in-space orientation and measure the effect of this manipulation on the subjective visual vertical (SVV). Specifically, we explore the effects of veridical and misleading instructions about body tilt orientations on the SVV. We used a psychophys- ical 2AFC SVV task at roll tilt angles of 0 degrees, 16 degrees and 4 degrees CW and CCW. Participants were tilted to 4 degrees under different instruction conditions: in one condition, participants received veridical instructions as to their tilt angle, whereas in another condition, participants received the mis- leading instruction that their body position was perfectly upright. Our results indicate systematic differences between the instruction conditions at 4 degrees CW and CCW. Participants did not simply use an ego-centric reference frame in the misleading condition; instead, participants’ estimates of the SVV seem to lie between their head’s Z-axis and the estimate of the SVV as measured in the veridical condition. All participants displayed A-effects at roll tilt an- gles of 16 degrees CW and CCW. We discuss our results in the context of the Bayesian model by De Vrijer et al. (2009), and claim that this pattern of re- sults is consistent with a manipulation of precision of a prior distribution over body-in-space orientations. Furthermore, we introduce a Bayesian Generalized Linear Model for estimating parameters of participants’ psychometric function, which allows us to jointly estimate group level and individual level parameters under all experimental conditions simultaneously, rather than relying on the traditional two-step approach to obtaining group level parameter estimates.

A complete-pelvis segmentation framework for image-free total hip arthroplasty (THA): methodology and clinical study

Background Complete-pelvis segmentation in antero-posterior pelvic radiographs is required to create a patient-specific three-dimensional pelvis model for surgical planning and postoperative assessment in image-free navigation of total hip arthroplasty. Methods A fast and robust framework for accurately segmenting the complete pelvis is presented, consisting of two consecutive modules. In the first module, a three-stage method was developed to delineate the left hemipelvis based on statistical appearance and shape models. To handle complex pelvic structures, anatomy-specific information processing techniques were employed. As the input to the second module, the delineated left hemi-pelvis was then reflected about an estimated symmetry line of the radiograph to initialize the right hemi-pelvis segmentation. The right hemi-pelvis was segmented by the same three-stage method, Results Two experiments conducted on respectively 143 and 40 AP radiographs demonstrated a mean segmentation accuracy of 1.61±0.68 mm. A clinical study to investigate the postoperative assessment of acetabular cup orientations based on the proposed framework revealed an average accuracy of 1.2°±0.9° and 1.6°±1.4° for anteversion and inclination, respectively. Delineation of each radiograph costs less than one minute. Conclusions Despite further validation needed, the preliminary results implied the underlying clinical applicability of the proposed framework for image-free THA.