A sketch of the Talmud : the world renowned collection of Jewish traditions

by Isidor Kalisch

Essays on behavioral aspects of the design and disclosure of compensation contracts

This thesis consists of four essays on the design and disclosure of compensation contracts. Essays 1, 2 and 3 focus on behavioral aspects of mandatory compensation disclosure rules and of contract negotiations in agency relationships. The three experimental studies develop psychology- based theory and present results that deviate from standard economic predictions. Furthermore, the results of Essay 1 and 2 also have implications for firms’ discretion in how to communicate their top management’s incentives to the capital market. Essay 4 analyzes the role of fairness perceptions for the evaluation of executive compensation. For this purpose, two surveys targeting representative eligible voters as well as investment professionals were conducted. Essay 1 investigates the role of the detailed ‘Compensation Discussion and Analysis’, which is part of the Security and Exchange Commission’s 2006 regulation, on investors’ evaluations of executive performance. Compensation disclosure complying with this regulation clarifies the relationship between realized reported compensation and the underlying performance measures and their target achievement levels. The experimental findings suggest that the salient presentation of executives’ incentives inherent in the ‘Compensation Discussion and Analysis’ makes investors’ performance evaluations less outcome dependent. Therefore, investors’ judgment and investment decisions might be less affected by noisy environmental factors that drive financial performance. The results also suggest that fairness perceptions of compensation contracts are essential for investors’ performance evaluations in that more transparent disclosure increases the perceived fairness of compensation and the performance evaluation of managers who are not responsible for a bad financial performance. These results have important practical implications as firms might choose to communicate their top management’s incentive compensation more transparently in order to benefit from less volatile expectations about their future performance. Similar to the first experiment, the experiment described in Essay 2 addresses the question of more transparent compensation disclosure. However, other than the first experiment, the second experiment does not analyze the effect of a more salient presentation of contract information but the informational effect of contract information itself. For this purpose, the experiment tests two conditions in which the assessment of the compensation contracts’ incentive compatibility, which determines executive effort, is either possible or not. On the one hand, the results suggest that the quality of investors’ expectations about executive effort is improved, but on the other hand investors might over-adjust their prior expectations about executive effort if being confronted with an unexpected financial performance and under-adjust if the financial performance confirms their prior expectations. Therefore, in the experiment, more transparent compensation disclosure does not lead to more correct overall judgments of executive effort and to even lower processing quality of outcome information. These results add to the literature on disclosure which predominantly advocates more transparency. The findings of the experiment however, identify decreased information processing quality as a relevant disclosure cost category. Firms might therefore carefully evaluate the additional costs and benefits of more transparent compensation disclosure. Together with the results from the experiment in Essay 1, the two experiments on compensation disclosure imply that firms should rather focus on their discretion how to present their compensation disclosure to benefit from investors’ improved fairness perceptions and their spill-over on performance evaluation. Essay 3 studies the behavioral effects of contextual factors in recruitment processes that do not affect the employer’s or the applicant’s bargaining power from a standard economic perspective. In particular, the experiment studies two common characteristics of recruitment processes: Pre-contractual competition among job applicants and job applicants’ non-binding effort announcements as they might be made during job interviews. Despite the standard economic irrelevance of these factors, the experiment develops theory regarding the behavioral effects on employees’ subsequent effort provision and the employers’ contract design choices. The experimental findings largely support the predictions. More specifically, the results suggest that firms can benefit from increased effort and, therefore, may generate higher profits. Further, firms may seize a larger share of the employment relationship’s profit by highlighting the competitive aspects of the recruitment process and by requiring applicants to make announcements about their future effort. Finally, Essay 4 studies the role of fairness perceptions for the public evaluation of executive compensation. Although economic criteria for the design of incentive compensation generally do not make restrictive recommendations with regard to the amount of compensation, fairness perceptions might be relevant from the perspective of firms and standard setters. This is because behavioral theory has identified fairness as an important determinant of individuals’ judgment and decisions. However, although fairness concerns about executive compensation are often stated in the popular media and even in the literature, evidence on the meaning of fairness in the context of executive compensation is scarce and ambiguous. In order to inform practitioners and standard setters whether fairness concerns are exclusive to non-professionals or relevant for investment professionals as well, the two surveys presented in Essay 4 aim to find commonalities in the opinions of representative eligible voters and investments professionals. The results suggest that fairness is an important criterion for both groups. Especially, exposure to risk in the form of the variable compensation share is an important criterion shared by both groups. The higher the assumed variable share, the higher is the compensation amount to be perceived as fair. However, to a large extent, opinions on executive compensation depend on personality characteristics, and to some extent, investment professionals’ perceptions deviate systematically from those of non-professionals. The findings imply that firms might benefit from emphasizing the riskiness of their managers’ variable pay components and, therefore, the findings are also in line with those of Essay 1.

International validation of a behavioral scale in Parkinson's disease without dementia.

The "Ardouin Scale of Behavior in Parkinson's Disease" is a new instrument specifically designed for assessing mood and behavior with a view to quantifying changes related to Parkinson's disease, to dopaminergic medication, and to non-motor fluctuations. This study was aimed at analyzing the psychometric attributes of this scale in patients with Parkinson's disease without dementia. In addition to this scale, the following measures were applied: the Unified Parkinson's Disease Rating Scale, the Montgomery and Asberg Depression Rating Scale, the Lille Apathy Rating Scale, the Bech and Rafaelsen Mania Scale, the Positive and Negative Syndrome Scale, the MacElroy Criteria, the Patrick Carnes criteria, the Hospital Anxiety and Depression Scale, and the Mini-International Neuropsychiatric Interview. Patients (n = 260) were recruited at 13 centers across four countries (France, Spain, United Kingdom, and United States). Cronbach's alpha coefficient for domains ranged from 0.69 to 0.78. Regarding test-retest reliability, the kappa coefficient for items was higher than 0.4. For inter-rater reliability, the kappa values were 0.29 to 0.81. Furthermore, most of the items from the Ardouin Scale of Behavior in Parkinson's Disease correlated with the corresponding items of the other scales, depressed mood with the Montgomery and Asberg Depression Rating Scale (ρ = 0.82); anxiety with the Hospital Anxiety and Depression Scale-anxiety (ρ = 0.56); apathy with the Lille Apathy Rating Scale (ρ = 0.60). The Ardouin Scale of Behavior in Parkinson's disease is an acceptable, reproducible, valid, and precise assessment for evaluating changes in behavior in patients with Parkinson's disease without dementia. © 2015 International Parkinson and Movement Disorder Society.

Serotonin versus catecholamine deficiency: behavioral and neural effects of experimental depletion in remitted depression

Despite immense efforts into development of new antidepressant drugs, the increases of serotoninergic and catecholaminergic neurotransmission have remained the two major pharmacodynamic principles of current drug treatments for depression. Consequently, psychopathological or biological markers that predict response to drugs that selectively increase serotonin and/or catecholamine neurotransmission hold the potential to optimize the prescriber's selection among currently available treatment options. The aim of this study was to elucidate the differential symptomatology and neurophysiology in response to reductions in serotonergic versus catecholaminergic neurotransmission in subjects at high risk of depression recurrence. Using identical neuroimaging procedures with [(18)F] fluorodeoxyglucose positron emission tomography after tryptophan depletion (TD) and catecholamine depletion (CD), subjects with remitted depression were compared with healthy controls in a double-blind, randomized, crossover design. Although TD induced significantly more depressed mood, sadness and hopelessness than CD, CD induced more inactivity, concentration difficulties, lassitude and somatic anxiety than TD. CD specifically increased glucose metabolism in the bilateral ventral striatum and decreased glucose metabolism in the bilateral orbitofrontal cortex, whereas TD specifically increased metabolism in the right prefrontal cortex and the posterior cingulate cortex. Although we found direct associations between changes in brain metabolism and induced depressive symptoms following CD, the relationship between neural activity and symptoms was less clear after TD. In conclusion, this study showed that serotonin and catecholamines have common and differential roles in the pathophysiology of depression.

A physiological and behavioral mechanism for leaf-herbivore induced systemic root resistance

Indirect plant-mediated interactions between herbivores are important drivers of community composition in terrestrial ecosystems. Among the most striking examples are the strong indirect interactions between spatially separated leaf- and root-feeding insects sharing a host plant. Although leaf feeders generally reduce the performance of root herbivores, little is known about the underlying systemic changes in root physiology and the associated behavioral responses of the root feeders. We investigated the consequences of maize (Zea mays) leaf infestation by Spodoptera littoralis caterpillars for the root-feeding larvae of the beetle Diabrotica virgifera virgifera, a major pest of maize. D. virgifera strongly avoided leaf-infested plants by recognizing systemic changes in soluble root components. The avoidance response occurred within 12 h and was induced by real and mimicked herbivory, but not wounding alone. Roots of leaf-infested plants showed altered patterns in soluble free and soluble conjugated phenolic acids. Biochemical inhibition and genetic manipulation of phenolic acid biosynthesis led to a complete disappearance of the avoidance response of D. virgifera. Furthermore, bioactivity-guided fractionation revealed a direct link between the avoidance response of D. virgifera and changes in soluble conjugated phenolic acids in the roots of leaf-attacked plants. Our study provides a physiological mechanism for a behavioral pattern that explains the negative effect of leaf attack on a root-feeding insect. Furthermore, it opens up the possibility to control D. virgifera in the field by genetically mimicking leaf herbivore-induced changes in root phenylpropanoid patterns.

Sociodemographic, behavioral and genetic determinants of allostatic load in a Swiss population-based study.

Allostatic load (AL) is a marker of physiological dysregulation which reflects exposure to chronic stress. High AL has been related to poorer health outcomes including mortality. We examine here the association of socioeconomic and lifestyle factors with AL. Additionally, we investigate the extent to which AL is genetically determined. We included 803 participants (52% women, mean age 48±16years) from a population and family-based Swiss study. We computed an AL index aggregating 14 markers from cardiovascular, metabolic, lipidic, oxidative, hypothalamus-pituitary-adrenal and inflammatory homeostatic axes. Education and occupational position were used as indicators of socioeconomic status. Marital status, stress, alcohol intake, smoking, dietary patterns and physical activity were considered as lifestyle factors. Heritability of AL was estimated by maximum likelihood. Women with a low occupational position had higher AL (low vs. high OR=3.99, 95%CI [1.22;13.05]), while the opposite was observed for men (middle vs. high OR=0.48, 95%CI [0.23;0.99]). Education tended to be inversely associated with AL in both sexes(low vs. high OR=3.54, 95%CI [1.69;7.4]/OR=1.59, 95%CI [0.88;2.90] in women/men). Heavy drinking men as well as women abstaining from alcohol had higher AL than moderate drinkers. Physical activity was protective against AL while high salt intake was related to increased AL risk. The heritability of AL was estimated to be 29.5% ±7.9%. Our results suggest that generalized physiological dysregulation, as measured by AL, is determined by both environmental and genetic factors. The genetic contribution to AL remains modest when compared to the environmental component, which explains approximately 70% of the phenotypic variance.

A fixed-links modeling approach to assess individual differences in the attentional blink: Analysis of behavioral and psychophysiological data

The attentional blink (AB) is a fundamental limitation of the ability to select relevant information from irrelevant information. It can be observed with the detection rate in an AB task as well as with the corresponding P300 amplitude of the event-related potential. In previous research, however, correlations between these two levels of observation were weak and rather inconsistent. A possible explanation of this finding might be that multiple processes underlie the AB and, thus, obscure a possible relationship between AB-related detection rate and the corresponding P300 amplitude. The present study investigated this assumption by applying a fixed-links modeling approach to represent behavioral individual differences in the AB as a latent variable. Concurrently, this approach enabled us to control for additional sources of variance in AB performance by deriving two additional latent variables. The correlation between the latent variable reflecting behavioral individual differences in AB magnitude and a corresponding latent variable derived from the P300 amplitude was high (r=.70). Furthermore, this correlation was considerably stronger than the correlations of other behavioral measures of the AB magnitude with their psychophysiological counterparts (all rs<.40). Our findings clearly indicate that the systematic disentangling of various sources of variance by utilizing the fixed-links modeling approach is a promising tool to investigate behavioral individual differences in the AB and possible psychophysiological correlates of these individual differences.

Elucidating underlying processes of psychometric intelligence: A comparison of behavioral response latency and P3 latency in a modified Hick reaction time paradigm

The mental speed approach explains individual differences in intelligence by faster information processing in individuals with higher compared to lower intelligence - especially in elementary cognitive tasks (ECTs). One of the most examined ECTs is the Hick paradigm. The present study aimed to contrast reaction time (RT) and P3 latency in a Hick task as predictors of intelligence. Although both, RT and P3 latency, are commonly used as indicators of mental speed, it is also known that they measure different aspects of information processing. Participants were 113 female students. RT and P3 latency were measured while participants completed the Hick task with four levels of complexity. Intelligence was assessed with Cattell's Culture Fair Test. A RT factor and a P3 factor were extracted by employing a PCA across complexity levels. There was no significant correlation between the factors. Commonality analysis was used to determine the proportions of unique and shared variance in intelligence explained by the RT and P3 latency factors. RT and P3 latency explained 5.5% and 5% of unique variance in intelligence. However, the two speed factors did not explain a significant portion of shared variance. This result suggests that RT and P3 latency in the Hick paradigm are measuring different aspects of information processing that explain different parts of variance in intelligence.

Clinical effectiveness of cognitive behavioral therapy for depression in routine care: A propensity score based comparison between randomized controlled trials and clinical practice

Background: The efficacy of cognitive behavioral therapy (CBT) for the treatment of depressive disorders has been demonstrated in many randomized controlled trials (RCTs). This study investigated whether for CBT similar effects can be expected under routine care conditions when the patients are comparable to those examined in RCTs. Method: N=574 CBT patients from an outpatient clinic were stepwise matched to the patients undergoing CBT in the National Institute of Mental Health Treatment of Depression Collaborative Research Program (TDCRP). First, the exclusion criteria of the RCT were applied to the naturalistic sample of the outpatient clinic. Second, propensity score matching (PSM) was used to adjust the remaining naturalistic sample on the basis of baseline covariate distributions. Matched samples were then compared regarding treatment effects using effect sizes, average treatment effect on the treated (ATT) and recovery rates. Results: CBT in the adjusted naturalistic subsample was as effective as in the RCT. However, treatments lasted significantly longer under routine care conditions. Limitations: The samples included only a limited amount of common predictor variables and stemmed from different countries. There might be additional covariates, which could potentially further improve the matching between the samples. Conclusions: CBT for depression in clinical practice might be equally effective as manual-based treatments in RCTs when they are applied to comparable patients. The fact that similar effects under routine conditions were reached with more sessions, however, points to the potential to optimize treatments in clinical practice with respect to their efficiency.