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.

Moving beyond a descriptive aquatic toxicology: the value of biological process and trait information

In order to improve the ability to link chemical exposure to toxicological and ecological effects, aquatic toxicology will have to move from observing what chemical concentrations induce adverse effects to more explanatory approaches, that are concepts which build on knowledge of biological processes and pathways leading from exposure to adverse effects, as well as on knowledge on stressor vulnerability as given by the genetic, physiological and ecological (e.g., life history) traits of biota. Developing aquatic toxicology in this direction faces a number of challenges, including (i) taking into account species differences in toxicant responses on the basis of the evolutionarily developed diversity of phenotypic vulnerability to environmental stressors, (ii) utilizing diversified biological response profiles to serve as biological read across for prioritizing chemicals, categorizing them according to modes of action, and for guiding targeted toxicity evaluation; (iii) prediction of ecological consequences of toxic exposure from knowledge of how biological processes and phenotypic traits lead to effect propagation across the levels of biological hierarchy; and (iv) the search for concepts to assess the cumulative impact of multiple stressors. An underlying theme in these challenges is that, in addition to the question of what the chemical does to the biological receptor, we should give increasing emphasis to the question how the biological receptor handles the chemicals, i.e., through which pathways the initial chemical-biological interaction extends to the adverse effects, how this extension is modulated by adaptive or compensatory processes as well as by phenotypic traits of the biological receptor.

An interfering Go/No-go task does not affect accuracy in a Concealed Information Test

Following the idea that response inhibition processes play a central role in concealing information, the present study investigated the influence of a Go/No-go task as an interfering mental activity, performed parallel to the Concealed Information Test (CIT), on the detectability of concealed information. 40 undergraduate students participated in a mock-crime experiment and simultaneously performed a CIT and a Go/No-go task. Electrodermal activity (EDA), respiration line length (RLL), heart rate (HR) and finger pulse waveform length (FPWL) were registered. Reaction times were recorded as behavioral measures in the Go/No-go task as well as in the CIT. As a within-subject control condition, the CIT was also applied without an additional task. The parallel task did not influence the mean differences of the physiological measures of the mock-crime-related probe and the irrelevant items. This finding might possibly be due to the fact that the applied parallel task induced a tonic rather than a phasic mental activity, which did not influence differential responding to CIT items. No physiological evidence for an interaction between the parallel task and sub-processes of deception (e.g. inhibition) was found. Subjects' performance in the Go/No-go parallel task did not contribute to the detection of concealed information. Generalizability needs further investigations of different variations of the parallel task.

Interaction between rheumatoid arthritis and pregnancy: correlation of molecular data with clinical disease activity measures

OBJECTIVE: The factors that induce remission of RA during pregnancy and the relapse occurring after delivery remain an enigma. In a previous study, we investigated gene-expression profiles of peripheral blood mononuclear cells (PBMC) in patients with RA and healthy women in late pregnancy and postpartum. Profiles of samples from both groups were similar in late pregnancy with elevated monocyte and decreased lymphocyte signatures. Postpartum, in RA PBMC the high level of monocyte transcripts persisted. Further increase was observed in adhesion, migration and signalling processes related to monocytes but also in lymphocytes despite similar clinical activity due to intensified drug treatment. This prompted us to investigate correlations between clinical parameters of disease activity and gene profiles. METHODS: Transcriptome data were correlated with RADAI, CRP, monocyte and lymphocyte counts. Kyoto Encyclopedia of Genes and Genomes (KEGG) pathway annotations, monocytes and lymphocytes signatures were used as reference information. RESULTS: Comparative analysis of PBMC expression profiles from RA patients during and after pregnancy with RADAI and CRP revealed a correlation of these disease activity parameters predominantly with monocyte transcripts. Genes related to cellular programs of adhesion, migration and response to infections were upregulated. Comparing clinically active and not-active RA patients postpartum revealed a cluster of 19 genes that could also identify active disease during pregnancy. CONCLUSION: The data suggest that an increase of the RADAI and an elevation of CRP is a consequence of molecular activation of monocytes. Furthermore, they indicate that molecular activation of T lymphocytes may remain clinically unrecognized postpartum. It is conceivable that a set of 19 genes may qualify as molecular disease activity marker.

When one depends on the other: reporting of interaction in case-control and cohort studies

BACKGROUND: Interaction refers to the situation in which the effect of 1 exposure on an outcome differs across strata of another exposure. We did a survey of epidemiologic studies published in leading journals to examine how interaction is assessed and reported. METHODS: We selected 150 case-control and 75 cohort studies published between May 2001 and May 2007 in leading general medicine, epidemiology, and clinical specialist journals. Two reviewers independently extracted data on study characteristics. RESULTS: Of the 225 studies, 138 (61%) addressed interaction. Among these, 25 (18%) presented no data or only a P value or a statement of statistical significance; 40 (29%) presented stratum-specific effect estimates but no meaningful comparison of these estimates; and 58 (42%) presented stratum-specific estimates and appropriate tests for interaction. Fifteen articles (11%) presented the individual effects of both exposures and also their joint effect or a product term, providing sufficient information to interpret interaction on an additive and multiplicative scale. Reporting was poorest in articles published in clinical specialist articles and most adequate in articles published in general medicine journals, with epidemiology journals in an intermediate position. CONCLUSIONS: A majority of articles reporting cohort and case-control studies address possible interactions between exposures. However, in about half of these, the information provided was unsatisfactory, and only 1 in 10 studies reported data that allowed readers to interpret interaction effects on an additive and multiplicative scale.

Response surface modeling of the interaction between propofol and sevoflurane

BACKGROUND: Propofol and sevoflurane display additivity for gamma-aminobutyric acid receptor activation, loss of consciousness, and tolerance of skin incision. Information about their interaction regarding electroencephalographic suppression is unavailable. This study examined this interaction as well as the interaction on the probability of tolerance of shake and shout and three noxious stimulations by using a response surface methodology. METHODS: Sixty patients preoperatively received different combined concentrations of propofol (0-12 microg/ml) and sevoflurane (0-3.5 vol.%) according to a crisscross design (274 concentration pairs, 3 to 6 per patient). After having reached pseudo-steady state, the authors recorded bispectral index, state and response entropy and the response to shake and shout, tetanic stimulation, laryngeal mask airway insertion, and laryngoscopy. For the analysis of the probability of tolerance by logistic regression, a Greco interaction model was used. For the separate analysis of bispectral index, state and response entropy suppression, a fractional Emax Greco model was used. All calculations were performed with NONMEM V (GloboMax LLC, Hanover, MD). RESULTS: Additivity was found for all endpoints, the Ce(50, PROP)/Ce(50, SEVO) for bispectral index suppression was 3.68 microg. ml(-1)/ 1.53 vol.%, for tolerance of shake and shout 2.34 microg . ml(-1)/ 1.03 vol.%, tetanic stimulation 5.34 microg . ml(-1)/ 2.11 vol.%, laryngeal mask airway insertion 5.92 microg. ml(-1) / 2.55 vol.%, and laryngoscopy 6.55 microg. ml(-1)/2.83 vol.%. CONCLUSION: For both electroencephalographic suppression and tolerance to stimulation, the interaction of propofol and sevoflurane was identified as additive. The response surface data can be used for more rational dose finding in case of sequential and coadministration of propofol and sevoflurane.

Information Integration Theory and the Construction of Individually Perceived Group Efficacy

According to Bandura (1997) efficacy beliefs are a primary determinant of motivation. Still, very little is known about the processes through which people integrate situational factors to form efficacy beliefs (Myers & Feltz, 2007). The aim of this study was to gain insight into the cognitive construction of subjective group-efficacy beliefs. Only with a sound understanding of those processes is there a sufficient base to derive psychological interventions aimed at group-efficacy beliefs. According to cognitive theories (e.g., Miller, Galanter, & Pribram, 1973) individual group-efficacy beliefs can be seen as the result of a comparison between the demands of a group task and the resources of the performing group. At the center of this comparison are internally represented structures of the group task and plans to perform it. The empirical plausibility of this notion was tested using functional measurement theory (Anderson, 1981). Twenty-three students (M = 23.30 years; SD = 3.39; 35 % females) of the University of Bern repeatedly judged the efficacy of groups in different group tasks. The groups consisted of the subjects and another one to two fictive group members. The latter were manipulated by their value (low, medium, high) in task-relevant abilities. Data obtained from multiple full factorial designs were structured with individuals as second level units and analyzed using mixed linear models. The task-relevant abilities of group members, specified as fixed factors, all had highly significant effects on subjects’ group-efficacy judgments. The effect sizes of the ability factors showed to be dependent on the respective abilities’ importance in a given task. In additive tasks (Steiner, 1972) group resources were integrated in a linear fashion whereas significant interaction between factors was obtained in interdependent tasks. The results also showed that people take into account other group members’ efficacy beliefs when forming their own group-efficacy beliefs. The results support the notion that personal group-efficacy beliefs are obtained by comparing the demands of a task with the performing groups’ resources. Psychological factors such as other team members’ efficacy beliefs are thereby being considered task relevant resources and affect subjective group-efficacy beliefs. This latter finding underlines the adequacy of multidimensional measures. While the validity of collective efficacy measures is usually estimated by how well they predict performances, the results of this study allow for a somewhat internal validity criterion. It is concluded that Information Integration Theory holds potential to further help understand people’s cognitive functioning in sport relevant situations.

Structural bases for the interaction and stabilization of the human amino acid transporter LAT2 with its ancillary protein 4F2hc.

Heteromeric amino acid transporters (HATs) are the unique example, known in all kingdoms of life, of solute transporters composed of two subunits linked by a conserved disulfide bridge. In metazoans, the heavy subunit is responsible for the trafficking of the heterodimer to the plasma membrane, and the light subunit is the transporter. HATs are involved in human pathologies such as amino acidurias, tumor growth and invasion, viral infection and cocaine addiction. However structural information about interactions between the heavy and light subunits of HATs is scarce. In this work, transmission electron microscopy and single-particle analysis of purified human 4F2hc/L-type amino acid transporter 2 (LAT2) heterodimers overexpressed in the yeast Pichia pastoris, together with docking analysis and crosslinking experiments, reveal that the extracellular domain of 4F2hc interacts with LAT2, almost completely covering the extracellular face of the transporter. 4F2hc increases the stability of the light subunit LAT2 in detergent-solubilized Pichia membranes, allowing functional reconstitution of the heterodimer into proteoliposomes. Moreover, the extracellular domain of 4F2hc suffices to stabilize solubilized LAT2. The interaction of 4F2hc with LAT2 gives insights into the structural bases for light subunit recognition and the stabilizing role of the ancillary protein in HATs.

Prometheus Framework for Fuzzy Information Retrieval in Semantic Spaces

This paper introduces a novel vision for further enhanced Internet of Things services. Based on a variety of data (such as location data, ontology-backed search queries, in- and outdoor conditions) the Prometheus framework is intended to support users with helpful recommendations and information preceding a search for context-aware data. Adapted from artificial intelligence concepts, Prometheus proposes user-readjusted answers on umpteen conditions. A number of potential Prometheus framework applications are illustrated. Added value and possible future studies are discussed in the conclusion.

Prometheus – Fuzzy Information Retrieval for Semantic Homes and Environments

This paper introduces a novel vision for further enhanced Internet of Things services. Based on a variety of data – such as location data, ontology-backed search queries, in- and outdoor conditions – the Prometheus framework is intended to support users with helpful recommendations and information preceding a search for context-aware data. Adapted from artificial intelligence concepts, Prometheus proposes user-readjusted answers on umpteen conditions. A number of potential Prometheus framework applications are illustrated. Added value and possible future studies are discussed in the conclusion.

Adsorption interaction of carrier-free thallium species with gold and quartz surfaces

The adsorption interactions of thallium and its compounds with gold and quartz surfaces were investigated. Carrier-free amounts of thallium were produced in nuclear fusion reactions of alpha particles with thick gold targets. The method chosen for the studies was gas thermochromatography and varying the redox potential of the carrier gases. It was observed that thallium is extremely sensitive to trace amounts of oxygen and water, and can even be oxidized by the hydroxyl groups located on the quartz surface. The experiments on a quartz surface with O2, He, H2 gas in addition with water revealed the formation and deposition of only one thallium species – TlOH. The adsorption enthalpy was determined to be Δ HSiO2ads(TlOH) = −134 ± 5 kJ mol−1. A series of experiments using gold as stationary surface and different carrier gases resulted in the detection of two thallium species – metallic Tl (H2 as carrier gas) and TlOH (O2, O2+H2O and H2+H2O as pure carrier gas or carrier gas mixture) with Δ HAuads(Tl) = −270 ± 10 kJ mol− and Δ HAuads(TlOH) = −146 ± 3 kJ mol−1. These data demonstrate a weak interaction of TlOH with both quartz and gold surfaces. The data represent important information for the design of future experiments with the heavier homologue of Tl in group 13 of the periodic table – element 113 (E113).

A novel phosphorylation-independent interaction between SMG6 and UPF1 is essential for human NMD

Eukaryotic mRNAs with premature translation-termination codons (PTCs) are recognized and eliminated by nonsense-mediated mRNA decay (NMD). NMD substrates can be degraded by different routes that all require phosphorylated UPF1 (P-UPF1) as a starting point. The endonuclease SMG6, which cleaves mRNA near the PTC, is one of the three known NMD factors thought to be recruited to nonsense mRNAs via an interaction with P-UPF1, leading to eventual mRNA degradation. By artificial tethering of SMG6 and mutants thereof to a reporter mRNA combined with knockdowns of various NMD factors, we demonstrate that besides its endonucleolytic activity, SMG6 also requires UPF1 and SMG1 to reduce reporter mRNA levels. Using in vivo and in vitro approaches, we further document that SMG6 and the unique stalk region of the UPF1 helicase domain, along with a contribution from the SQ domain, form a novel interaction and we also show that this region of the UPF1 helicase domain is critical for SMG6 function and NMD. Our results show that this interaction is required for NMD and for the capability of tethered SMG6 to degrade its bound RNA, suggesting that it contributes to the intricate regulation of UPF1 and SMG6 enzymatic activities.