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.

The long-term mechanical integrity of non-reinforced PEEK-OPTIMA polymer for demanding spinal applications: experimental and finite-element analysis

Polyetheretherketone (PEEK) is a novel polymer with potential advantages for its use in demanding orthopaedic applications (e.g. intervertebral cages). However, the influence of a physiological environment on the mechanical stability of PEEK has not been reported. Furthermore, the suitability of the polymer for use in highly stressed spinal implants such as intervertebral cages has not been investigated. Therefore, a combined experimental and analytical study was performed to address these open questions. A quasi-static mechanical compression test was performed to compare the initial mechanical properties of PEEK-OPTIMA polymer in a dry, room-temperature and in an aqueous, 37 degrees C environment (n=10 per group). The creep behaviour of cylindrical PEEK polymer specimens (n=6) was measured in a simulated physiological environment at an applied stress level of 10 MPa for a loading duration of 2000 hours (12 weeks). To compare the biomechanical performance of different intervertebral cage types made from PEEK and titanium under complex loading conditions, a three-dimensional finite element model of a functional spinal unit was created. The elastic modulus of PEEK polymer specimens in a physiological environment was 1.8% lower than that of specimens tested at dry, room temperature conditions (P<0.001). The results from the creep test showed an average creep strain of less than 0.1% after 2000 hours of loading. The finite element analysis demonstrated high strain and stress concentrations at the bone/implant interface, emphasizing the importance of cage geometry for load distribution. The stress and strain maxima in the implants were well below the material strength limits of PEEK. In summary, the experimental results verified the mechanical stability of the PEEK-OPTIMA polymer in a simulated physiological environment, and over extended loading periods. Finite element analysis supported the use of PEEK-OPTIMA for load-bearing intervertebral implants.

Stability and kinetics of nucleic acid triplexes with chimaeric DNA/RNA third strands

A series of chimaeric DNA/RNA triplex-forming oligonucleotides (TFOs) with identical base-sequence but varying sequential composition of the sugar residues were prepared. The structural, kinetic and thermodynamic properties of triplex formation with their corresponding double-helical DNA target were investigated by spectroscopic methods. Kinetic and thermodynamic data were obtained from analysis of non-equilibrium UV-melting- and annealing curves in the range of pH 5.1 to 6.7 in a 10 mM citrate/phosphate buffer containing 0.1M NaCl and 1 mM EDTA. It was found that already single substitutions of ribo- for deoxyribonucleotides in the TFOs greatly affect stability and kinetics of triplex formation in a strongly sequence dependent manner. Within the sequence context investigated, triplex stability was found to increase when deoxyribonucleotides were present at the 5'-side and ribonucleotides in the center of the TFO. Especially the substitution of thymidines for uridines in the TFO was found to accelerate both, the association and dissociation process, in a strongly position-dependent way. Differential structural information on triplexes and TFO single-strands was obtained from CD-spectroscopy and gel mobility experiments. Only minor changes were observed in the CD spectra of the triplexes at all pH values investigated, and the electrophoretic mobility was nearly identical in all cases, indicating a high degree of structural similarity. In contrast, the single-stranded TFOs showed high structural variability as determined in the same way. The results are discussed in the context of the design of TFOs for therapeutic or biochemical applications.

Surgical treatment of upper, middle and lower cervical injuries and non-unions by anterior procedures

The goals of any treatment of cervical spine injuries are: return to maximum functional ability, minimum of residual pain, decrease of any neurological deficit, minimum of residual deformity and prevention of further disability. The advantages of surgical treatment are the ability to reach optimal reduction, immediate stability, direct decompression of the cord and the exiting roots, the need for only minimum external fixation, the possibility for early mobilisation and clearly decreased nursing problems. There are some reasons why those goals can be reached better by anterior surgery. Usually the bony compression of the cord and roots comes from the front therefore anterior decompression is usually the procedure of choice. Also, the anterior stabilisation with a plate is usually simpler than a posterior instrumentation. It needs to be stressed that closed reduction by traction can align the fractured spine and indirectly decompress the neural structures in about 70%. The necessary weight is 2.5 kg per level of injury. In the upper cervical spine, the odontoid fracture type 2 is an indication for anterior surgery by direct screw fixation. Joint C1/C2 dislocations or fractures or certain odontoid fractures can be treated with a fusion of the C1/C2 joint by anterior transarticular screw fixation. In the lower and middle cervical spine, anterior plating combined with iliac crest or fibular strut graft is the procedure of choice, however, a solid graft can also be replaced by filled solid or expandable vertebral cages. The complication of this surgery is low, when properly executed and anterior surgery may only be contra-indicated in case of a significant lesion or locked joints.

Early non-invasive cardiac output monitoring in hemodynamically unstable intensive care patients: A multi-center randomized controlled trial

Introduction Acute hemodynamic instability increases morbidity and mortality. We investigated whether early non-invasive cardiac output monitoring enhances hemodynamic stabilization and improves outcome. Methods A multicenter, randomized controlled trial was conducted in three European university hospital intensive care units in 2006 and 2007. A total of 388 hemodynamically unstable patients identified during their first six hours in the intensive care unit (ICU) were randomized to receive either non-invasive cardiac output monitoring for 24 hrs (minimally invasive cardiac output/MICO group; n = 201) or usual care (control group; n = 187). The main outcome measure was the proportion of patients achieving hemodynamic stability within six hours of starting the study. Results The number of hemodynamic instability criteria at baseline (MICO group mean 2.0 (SD 1.0), control group 1.8 (1.0); P = .06) and severity of illness (SAPS II score; MICO group 48 (18), control group 48 (15); P = .86)) were similar. At 6 hrs, 45 patients (22%) in the MICO group and 52 patients (28%) in the control group were hemodynamically stable (mean difference 5%; 95% confidence interval of the difference -3 to 14%; P = .24). Hemodynamic support with fluids and vasoactive drugs, and pulmonary artery catheter use (MICO group: 19%, control group: 26%; P = .11) were similar in the two groups. The median length of ICU stay was 2.0 (interquartile range 1.2 to 4.6) days in the MICO group and 2.5 (1.1 to 5.0) days in the control group (P = .38). The hospital mortality was 26% in the MICO group and 21% in the control group (P = .34). Conclusions Minimally-invasive cardiac output monitoring added to usual care does not facilitate early hemodynamic stabilization in the ICU, nor does it alter the hemodynamic support or outcome. Our results emphasize the need to evaluate technologies used to measure stroke volume and cardiac output--especially their impact on the process of care--before any large-scale outcome studies are attempted.

Long-term stability of surgical bone regenerative procedures of peri-implantitis lesions in a prospective case-control study over 3 years

Objectives: To evaluate the extent of bone fill over 3 years following the surgical treatment of peri-implantitis with bone grafting with or without a membrane. Material and Methods: In a non-submerged wound-healing mode, 15 subjects with 27 implants were treated with a bone substitute (Algipore®) alone and 17 subjects with 29 implants were treated with the bone substitute and a resorbable membrane (Osseoquest®). Implants with radiographic bone loss ≥1.8 mm following the first year in function and with bleeding and/or pus on probing were included. Following surgery, subjects were given systemic antibiotics (10 days) and rinsed with chlorhexidine. After initial healing, the subjects were enrolled in a strict maintenance programme. Results: Statistical analysis failed to demonstrate changes in bone fill between 1 and 3 years both between and within procedure groups. The mean defect fill at 3 years was 1.3 ± (SD) 1.3 mm if treated with the bone substitute alone and 1.6 ± (SD) 1.2 mm if treated with an adjunct resorbable membrane, (p=0.40). The plaque index decreased from approximately 40–10%, remaining stable during the following 2 years. Conclusion: Defect fill using a bone substitute with or without a membrane technique in the treatment of peri-implantitis can be maintained over 3 years.

Position-dependent effects on stability in tricyclo-DNA modified oligonucleotide duplexes

A series of oligodeoxyribonucleotides and oligoribonucleotides containing single and multiple tricyclo(tc)-nucleosides in various arrangements were prepared and the thermal and thermodynamic transition profiles of duplexes with complementary DNA and RNA evaluated. Tc-residues aligned in a non-continuous fashion in an RNA strand significantly decrease affinity to complementary RNA and DNA, mostly as a consequence of a loss of pairing enthalpy DeltaH. Arranging the tc-residues in a continuous fashion rescues T(m) and leads to higher DNA and RNA affinity. Substitution of oligodeoxyribonucleotides in the same way causes much less differences in T(m) when paired to complementary DNA and leads to substantial increases in T(m) when paired to complementary RNA. CD-spectroscopic investigations in combination with molecular dynamics simulations of duplexes with single modifications show that tc-residues in the RNA backbone distinctly influence the conformation of the neighboring nucleotides forcing them into higher energy conformations, while tc-residues in the DNA backbone seem to have negligible influence on the nearest neighbor conformations. These results rationalize the observed affinity differences and are of relevance for the design of tc-DNA containing oligonucleotides for applications in antisense or RNAi therapy.

Comparative stability studies of poly(2-methyl-2-oxazoline) and poly(ethylene glycol) brush coatings

Non-fouling surfaces that resist non-specific adsorption of proteins, bacteria, and higher organisms are of particular interest in diverse applications ranging from marine coatings to diagnostic devices and biomedical implants. Poly(ethylene glycol) (PEG) is the most frequently used polymer to impart surfaces with such non-fouling properties. Nevertheless, limitations in PEG stability have stimulated research on alternative polymers that are potentially more stable than PEG. Among them, we previously investigated poly(2-methyl-2-oxazoline) (PMOXA), a peptidomimetic polymer, and found that PMOXA shows excellent anti-fouling properties. Here, we compare the stability of films self-assembled from graft copolymers exposing a dense brush layer of PEG and PMOXA side chains, respectively, in physiological and oxidative media. Before media exposure both film types prevented the adsorption of full serum proteins to below the detection limit of optical waveguide in situ measurements. Before and after media exposure for up to 2 weeks, the total film thickness, chemical composition, and total adsorbed mass of the films were quantified using variable angle spectroscopic ellipsometry (VASE), X-ray photoelectron spectroscopy (XPS), and optical waveguide lightmode spectroscopy (OWLS), respectively. We found (i) that PMOXA graft copolymer films were significantly more stable than PEG graft copolymer films and kept their protein-repellent properties under all investigated conditions and (ii) that film degradation was due to side chain degradation rather than due to copolymer desorption.

Cyclin D1 (CCND1) A870G gene polymorphism modulates smoking-induced lung cancer risk and response to platinum-based chemotherapy in non-small cell lung cancer (NSCLC) patients

PURPOSE: The cyclin D1 (CCND1) A870G gene polymorphism is linked to the outcome in patients with resectable non-small cell lung cancer (NSCLC). Here, we investigated the impact of this polymorphism on smoking-induced cancer risk and clinical outcome in patients with NSCLC stages I-IV. METHODS: CCND1 A870G genotype was determined by polymerase chain reaction (PCR) and restriction fragment length polymorphism analysis (RFLP) of DNA extracted from blood. The study included 244 NSCLC patients and 187 healthy control subjects. RESULTS: Patient characteristics were: 70% male, 77% smokers, 43% adenocarcinoma, and 27% squamous cell carcinoma. Eighty-one percent of the patients had stages III-IV disease. Median age at diagnosis was 60 years and median survival was 13 months. Genotype frequencies of patients and controls both conformed to the Hardy Weinberg equilibrium. The GG genotype significantly correlated with a history of heavy smoking (>or=40 py, P=0.02), and patients with this genotype had a significantly higher cigarette consumption than patients with AA/AG genotypes (P=0.007). The GG genotype also significantly correlated with tumor response or stabilization after a platinum-based first-line chemotherapy (P=0.04). Survival analysis revealed no significant differences among the genotypes. CONCLUSION: Evidence was obtained that the CCND1 A870G gene polymorphism modulates smoking-induced lung cancer risk. Further studies are required to explore the underlying molecular mechanisms and to test the value of this gene polymorphism as a predictor for platinum-sensitivity in NSCLC patients.

Significance of primary stability for osseointegration of dental implants

AIM: To investigate the significance of the initial stability of dental implants for the establishment of osseointegration in an experimental capsule model for bone augmentation. MATERIAL AND METHODS: Sixteen male rats were used in the study. In each rat, muscle-periosteal flaps were elevated on the lateral aspect of the mandibular ramus on both sides, resulting in exposure of the bone surface. Small perforations were then produced in the ramus. A rigid, hemispherical Teflon capsule with a diameter of 6 mm and a height of 4 mm and with a hole in its middle portion, prepared to fit the circumference of an ITI HC titanium implant of 2.8 mm in diameter, was fixed to the ramus using 4 mini-screws. On one side of the jaw, the implant was placed through the hole in such a way that its apex did not make contact with the mandibular ramus (test). This placement of the implant did not ensure primary stability. On the other side of the jaw, a similar implant was placed through the hole of the capsule in such a way that contact was made between the implant and the surface of the ramus (control). This provided primary stability of the implant. After placement of the implants, the soft tissues were repositioned over the capsules and sutured. After 1, 3, 6 and 9 months, four animals were sacrificed and subjected to histometric analysis. RESULTS: The mean height of direct bone-to-implant contact of implants with primary stability was 38.8%, 52.9%, 64.6% and 81.3% of the implant length at 1, 3, 6 and 9 months, respectively. Of the bone adjacent to the implant surface, 28.1%, 28.9%, 52.6% and 69.6%, respectively, consisted of mineralized bone. At the test implants, no bone-to-implant contact was observed at any observation time or in any of these non-stabilized specimens. CONCLUSION: The findings of the present study indicate that primary implant stability is a prerequisite for successful osseointegration, and that implant instability results in fibrous encapsulation, thus confirming previously made clinical observations.