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.

Epileptic seizures as condensed sleep: an analysis of network dynamics from electroencephalogram signals

Both deepening sleep and evolving epileptic seizures are associated with increasing slow-wave activity. Larger-scale functional networks derived from electroencephalogram indicate that in both transitions dramatic changes of communication between brain areas occur. During seizures these changes seem to be 'condensed', because they evolve more rapidly than during deepening sleep. Here we set out to assess quantitatively functional network dynamics derived from electroencephalogram signals during seizures and normal sleep. Functional networks were derived from electroencephalogram signals from wakefulness, light and deep sleep of 12 volunteers, and from pre-seizure, seizure and post-seizure time periods of 10 patients suffering from focal onset pharmaco-resistant epilepsy. Nodes of the functional network represented electrical signals recorded by single electrodes and were linked if there was non-random cross-correlation between the two corresponding electroencephalogram signals. Network dynamics were then characterized by the evolution of global efficiency, which measures ease of information transmission. Global efficiency was compared with relative delta power. Global efficiency significantly decreased both between light and deep sleep, and between pre-seizure, seizure and post-seizure time periods. The decrease of global efficiency was due to a loss of functional links. While global efficiency decreased significantly, relative delta power increased except between the time periods wakefulness and light sleep, and pre-seizure and seizure. Our results demonstrate that both epileptic seizures and deepening sleep are characterized by dramatic fragmentation of larger-scale functional networks, and further support the similarities between sleep and seizures.

Dynamic Transmission Modes to Support Opportunistic Information-Centric Networks

In this paper, we describe dynamic unicast to increase communication efficiency in opportunistic Information-centric networks. The approach is based on broadcast requests to quickly find content and dynamically creating unicast links to content sources without the need of neighbor discovery. The links are kept temporarily as long as they deliver content and are quickly removed otherwise. Evaluations in mobile networks show that this approach maintains ICN flexibility to support seamless mobile communication and achieves up to 56.6% shorter transmission times compared to broadcast in case of multiple concurrent requesters. Apart from that, dynamic unicast unburdens listener nodes from processing unwanted content resulting in lower processing overhead and power consumption at these nodes. The approach can be easily included into existing ICN architectures using only available data structures.

Visualization and quantitative analysis of nanoparticles in the respiratory tract by transmission electron microscopy

ABSTRACT: Nanotechnology in its widest sense seeks to exploit the special biophysical and chemical properties of materials at the nanoscale. While the potential technological, diagnostic or therapeutic applications are promising there is a growing body of evidence that the special technological features of nanoparticulate material are associated with biological effects formerly not attributed to the same materials at a larger particle scale. Therefore, studies that address the potential hazards of nanoparticles on biological systems including human health are required. Due to its large surface area the lung is one of the major sites of interaction with inhaled nanoparticles. One of the great challenges of studying particle-lung interactions is the microscopic visualization of nanoparticles within tissues or single cells both in vivo and in vitro. Once a certain type of nanoparticle can be identified unambiguously using microscopic methods it is desirable to quantify the particle distribution within a cell, an organ or the whole organism. Transmission electron microscopy provides an ideal tool to perform qualitative and quantitative analyses of particle-related structural changes of the respiratory tract, to reveal the localization of nanoparticles within tissues and cells and to investigate the 3D nature of nanoparticle-lung interactions.This article provides information on the applicability, advantages and disadvantages of electron microscopic preparation techniques and several advanced transmission electron microscopic methods including conventional, immuno and energy-filtered electron microscopy as well as electron tomography for the visualization of both model nanoparticles (e.g. polystyrene) and technologically relevant nanoparticles (e.g. titanium dioxide). Furthermore, we highlight possibilities to combine light and electron microscopic techniques in a correlative approach. Finally, we demonstrate a formal quantitative, i.e. stereological approach to analyze the distributions of nanoparticles in tissues and cells.This comprehensive article aims to provide a basis for scientists in nanoparticle research to integrate electron microscopic analyses into their study design and to select the appropriate microscopic strategy.

Opportunistic Content-Centric Data Transmission During Short Network Contacts

In this paper, we investigate content-centric data transmission in the context of short opportunistic contacts and base our work on an existing content-centric networking architecture. In case of short interconnection times, file transfers may not be completed and the received information is discarded. Caches in content-centric networks are used for short-term storage and do not guarantee persistence. We implemented a mechanism to extend caching on persistent storage enabling the completion of disrupted content transfers. The mechanisms have been implemented in the CCNx framework and have been evaluated on wireless mesh nodes. Our evaluations using multicast and unicast communication show that the implementation can support content transfers in opportunistic environments without significant processing and storing overhead.

QoE-aware Multiple Path Video Transmission for Wireless Multimedia Sensor Networks

Wireless Multimedia Sensor Networks (WMSNs) promise a wide scope of emerging potential applications in both civilian and military areas, which require visual and audio information to enhance the level of collected information. The transmission of multimedia content requires a minimal video quality level from the user’s perspective. However, links in WMSN communi- cations are typically unreliable, as they often experience fluctuations in quality and weak connectivity, and thus, the routing protocol must evaluate the routes by using end-to-end link quality information to increase the packet delivery ratio. Moreover, the use multiple paths together with key video metrics can enhance the video quality level. In this paper, we propose a video-aware multiple path hierarchical routing protocol for efficient multimedia transmission over WMSN, called video-aware MMtransmission. This protocol finds node-disjoint multiple paths, and implements an end-to-end link quality estimation with minimal over- head to score the paths. Thus, our protocol assures multimedia transmission with Quality of Experience (QoE) and energy-efficiency support. The simula- tion results show the benefits of video-aware MMtransmission for disseminating video content by means of energy-efficiency and QoE analysis.

An OMNeT++ Framework to Evaluate Video Transmission in Mobile Wireless Multimedia Sensor Networks

The development and evaluation of new algorithms and protocols for Wireless Multimedia Sensor Networks (WMSNs) are usually supported by means of a discrete event network simulator, where OMNeT++ is one of the most important ones. However, experiments involving multimedia transmission, video flows with different characteristics, genres, group of pictures lengths, and coding techniques must be evaluated based also on Quality of Experience (QoE) metrics to reflect the user's perception. Such experiments require the evaluation of video-related information, i.e., frame type, received/lost, delay, jitter, decoding errors, as well as inter and intra-frame dependency of received/distorted videos. However, existing OMNeT++ frameworks for WMSNs do not support video transmissions with QoE-awareness, neither a large set of mobility traces to enable evaluations under different multimedia/mobile situations. In this paper, we propose a Mobile MultiMedia Wireless Sensor Network OMNeT++ framework (M3WSN) to support transmission, control and evaluation of real video sequences in mobile WMSNs.

A Link Quality and Geographical-aware Routing Protocol for Video Transmission in Mobile IoT

Wireless mobile sensor networks are enlarging the Internet of Things (IoT) portfolio with a huge number of multimedia services for smart cities. Safety and environmental monitoring multimedia applications will be part of the Smart IoT systems, which aim to reduce emergency response time, while also predicting hazardous events. In these mobile and dynamic (possible disaster) scenarios, opportunistic routing allows routing decisions in a completely distributed manner, by using a hop- by-hop route decision based on protocol-specific characteristics, and a predefined end-to-end path is not a reliable solution. This enables the transmission of video flows of a monitored area/object with Quality of Experience (QoE) support to users, headquarters or IoT platforms. However, existing approaches rely on a single metric to make the candidate selection rule, including link quality or geographic information, which causes a high packet loss rate, and reduces the video perception from the human standpoint. This article proposes a cross-layer Link quality and Geographical-aware Opportunistic routing protocol (LinGO), which is designed for video dissemination in mobile multimedia IoT environments. LinGO improves routing decisions using multiple metrics, including link quality, geographic loca- tion, and energy. The simulation results show the benefits of LinGO compared with well-known routing solutions for video transmission with QoE support in mobile scenarios.

Adaptive Interest Lifetimes for Information-Centric Wireless Multi-hop Communication

Information-centric networking (ICN) is a promising approach for wireless communication because users can exploit the broadcast nature of the wireless medium to quickly find desired content at nearby nodes. However, wireless multi-hop communication is prone to collisions and it is crucial to quickly detect and react to them to optimize transmission times and a void spurious retransmissions. Several adaptive retransmission timers have been used in related ICN literature but they have not been compared and evaluated in wireless multi-hop environments. In this work, we evaluate existing algorithms in wireless multi-hop communication. We find that existing algorithms are not optimized for wireless communication but slight modificati ons can result in considerably better performance without increasing the number of transmitted Interests.

Information-centric communication in mobile and wireless networks

Information-centric networking (ICN) is a new communication paradigm that has been proposed to cope with drawbacks of host-based communication protocols, namely scalability and security. In this thesis, we base our work on Named Data Networking (NDN), which is a popular ICN architecture, and investigate NDN in the context of wireless and mobile ad hoc networks. In a first part, we focus on NDN efficiency (and potential improvements) in wireless environments by investigating NDN in wireless one-hop communication, i.e., without any routing protocols. A basic requirement to initiate informationcentric communication is the knowledge of existing and available content names. Therefore, we develop three opportunistic content discovery algorithms and evaluate them in diverse scenarios for different node densities and content distributions. After content names are known, requesters can retrieve content opportunistically from any neighbor node that provides the content. However, in case of short contact times to content sources, content retrieval may be disrupted. Therefore, we develop a requester application that keeps meta information of disrupted content retrievals and enables resume operations when a new content source has been found. Besides message efficiency, we also evaluate power consumption of information-centric broadcast and unicast communication. Based on our findings, we develop two mechanisms to increase efficiency of information-centric wireless one-hop communication. The first approach called Dynamic Unicast (DU) avoids broadcast communication whenever possible since broadcast transmissions result in more duplicate Data transmissions, lower data rates and higher energy consumption on mobile nodes, which are not interested in overheard Data, compared to unicast communication. Hence, DU uses broadcast communication only until a content source has been found and then retrieves content directly via unicast from the same source. The second approach called RC-NDN targets efficiency of wireless broadcast communication by reducing the number of duplicate Data transmissions. In particular, RC-NDN is a Data encoding scheme for content sources that increases diversity in wireless broadcast transmissions such that multiple concurrent requesters can profit from each others’ (overheard) message transmissions. If requesters and content sources are not in one-hop distance to each other, requests need to be forwarded via multi-hop routing. Therefore, in a second part of this thesis, we investigate information-centric wireless multi-hop communication. First, we consider multi-hop broadcast communication in the context of rather static community networks. We introduce the concept of preferred forwarders, which relay Interest messages slightly faster than non-preferred forwarders to reduce redundant duplicate message transmissions. While this approach works well in static networks, the performance may degrade in mobile networks if preferred forwarders may regularly move away. Thus, to enable routing in mobile ad hoc networks, we extend DU for multi-hop communication. Compared to one-hop communication, multi-hop DU requires efficient path update mechanisms (since multi-hop paths may expire quickly) and new forwarding strategies to maintain NDN benefits (request aggregation and caching) such that only a few messages need to be transmitted over the entire end-to-end path even in case of multiple concurrent requesters. To perform quick retransmission in case of collisions or other transmission errors, we implement and evaluate retransmission timers from related work and compare them to CCNTimer, which is a new algorithm that enables shorter content retrieval times in information-centric wireless multi-hop communication. Yet, in case of intermittent connectivity between requesters and content sources, multi-hop routing protocols may not work because they require continuous end-to-end paths. Therefore, we present agent-based content retrieval (ACR) for delay-tolerant networks. In ACR, requester nodes can delegate content retrieval to mobile agent nodes, which move closer to content sources, can retrieve content and return it to requesters. Thus, ACR exploits the mobility of agent nodes to retrieve content from remote locations. To enable delay-tolerant communication via agents, retrieved content needs to be stored persistently such that requesters can verify its authenticity via original publisher signatures. To achieve this, we develop a persistent caching concept that maintains received popular content in repositories and deletes unpopular content if free space is required. Since our persistent caching concept can complement regular short-term caching in the content store, it can also be used for network caching to store popular delay-tolerant content at edge routers (to reduce network traffic and improve network performance) while real-time traffic can still be maintained and served from the content store.