Social preferences and skill segregation

This paper shows that models where preferences of individuals dependnot only on their allocations, but also on the well-being of otherpersons, can produce both large and testable effects. We study theallocation of workers with heterogeneous productivities to firms. Weshow that even small deviations from purely selfish preferences leadsto widespread workplace skill segregation. That is, workers ofdifferent abilities tend to work in di¤erent firms, as long as theycare somewhat more about the utilities of workers who are close .

Full insurance, asymmetric information and genetic testing

This paper extends previous resuls on optimal insurance trading in the presence of a stock market that allows continuous asset trading and substantial personal heterogeneity, and applies those results in a context of asymmetric informationwith references to the role of genetic testing in insurance markets.We find a novel and surprising result under symmetric information:agents may optimally prefer to purchase full insurance despitethe presence of unfairly priced insurance contracts, and other assets which are correlated with insurance.Asymmetric information has a Hirschleifer-type effect whichcan be solved by suspending insurance trading. Nevertheless,agents can attain their first best allocations, which suggeststhat the practice of restricting insurance not to be contingenton genetic tests can be efficient.

Using composite estimators to improve both domain and total area estimation

In this article we propose using small area estimators to improve the estimatesof both the small and large area parameters. When the objective is to estimateparameters at both levels accurately, optimality is achieved by a mixed sampledesign of fixed and proportional allocations. In the mixed sample design, oncea sample size has been determined, one fraction of it is distributedproportionally among the different small areas while the rest is evenlydistributed among them. We use Monte Carlo simulations to assess theperformance of the direct estimator and two composite covariant-freesmall area estimators, for different sample sizes and different sampledistributions. Performance is measured in terms of Mean Squared Errors(MSE) of both small and large area parameters. It is found that the adoptionof small area composite estimators open the possibility of 1) reducingsample size when precision is given, or 2) improving precision for a givensample size.

The gain-loss asymmetry and single-self preferences

Kahneman and Tversky asserted a fundamental asymmetry between gains and losses, namely a reflection effect which occurs when an individual prefers a sure gain of $ pz to anuncertain gain of $ z with probability p, while preferring an uncertain loss of $z with probability p to a certain loss of $ pz.We focus on this class of choices (actuarially fair), and explore the extent to which thereflection effect, understood as occurring at a range of wealth levels, is compatible with single-self preferences.We decompose the reflection effect into two components, a probability switch effect,which is compatible with single-self preferences, and a translation effect, which is not. To argue the first point, we analyze two classes of single-self, nonexpected utility preferences, which we label homothetic and weakly homothetic. In both cases, we characterize the switch effect as well as the dependence of risk attitudes on wealth.We also discuss two types of utility functions of a form reminiscent of expected utility but with distorted probabilities. Type I always distorts the probability of the worst outcome downwards, yielding attraction to small risks for all probabilities. Type II distorts low probabilities upwards, and high probabilities downwards, implying risk aversion when the probability of the worst outcome is low. By combining homothetic or weak homothetic preferences with Type I or Type II distortion functions, we present four explicit examples: All four display a switch effect and, hence, a form of reflection effect consistent a single self preferences.

Influence of CYP2D6 activity on pre-emptive analgesia by the N-methyl-D-aspartate antagonist dextromethorphan in a randomized controlled trial of acute pain.

BACKGROUND: There is some evidence that dextromethorphan (DM) is effective as a pre-emptive analgesic agent.  DM is mainly metabolized to dextrorphan (DOR) by CYP2D6 whose activity can be inhibited by pharmacologic intervention. OBJECTIVES: To investigate the efficacy of DM as a pre-emptive analgesic agent and describe the population pharmacokinetics in the presence of normal and poor CYP2D6 metabolism in acute post-operative pain. STUDY DESIGN: Double blind, randomized, placebo-controlled trial SETTING: Post-surgical analgesic consumption after knee ligament surgery, a setting of acute pain. METHODS: Forty patients were randomized to a single oral dose of 50 mg quinidine or placebo, administered 12 hours before 50 mg DM. Patients were genotyped for the major CYP2D6 and ABCB1 variants and phenotyped for CYP2D6 using urine DM/DOR metabolic ratios and blood samples for population pharmacokinetic modeling. RESULTS: Quinidine was effective in inhibiting CYP2D6 activity, with 2-fold reduction of DM to DOR biotransformation clearance, prolonged DM half-life, and increased DM systemic availability. Patients in the quinidine group required significantly less often NSAIDs than patients in the placebo group (35.3% vs. 75.0%, P = 0.022). The odds ratio for NSAID consumption in the placebo vs. quinidine group was 5.5 (95% confidence interval (CI) 1.3 - 22.7) at 48 hours after surgery. LIMITATIONS: While this study shows an impact of DM on pre-emptive analgesia and is mechanistically interesting, the findings need to be confirmed in larger trials. CONCLUSION: CYP2D6 inhibition by quinidine influenced the pre-emptive analgesic effectiveness of DM confirming that CYP2D6 phenotypic switch increases the neuromodulatory effect of oral dextromethorphan.

On Rothschild-Stiglitz as competitive pooling

Dubey and Geanakoplos [2002] have developed a theory of competitive pooling, which incorporates adverse selection and signaling into general equilibrium. By recasting the Rothschild-Stiglitz model of insurance in this framework, they find that a separating equilibrium always exists and is unique.We prove that their uniqueness result is not a consequence of the framework, but rather of their definition of refined equilibria. When other types of perturbations are used, the model allows for many pooling allocations to be supported as such: in particular, this is the case for pooling allocations that Pareto dominate the separating equilibrium.

Nature versus nurture in social insect caste determination

Recent evidence for genetic effects on royal and worker caste differentiation from diverse social insect taxa has put an end to the view that these phenotypes stem solely from a developmental switch controlled by environmental factors. Instead, the relative influences of genotypic and environmental effects on caste vary among species, ranging from largely environmentally controlled phenotypes to almost purely genetic systems. Disentangling the selective forces that generate variation for caste predisposition will require characterizing the genetic mechanisms underlying this variation, and identifying particular life-history strategies and kin structures associated with strong genetic effects on caste.

Optimal taxation without state-contingent debt

To recover a version of Barro's (1979) `random walk'tax smoothing outcome, we modify Lucas and Stokey's (1983) economyto permit only risk--free debt. This imparts near unit root like behaviorto government debt, independently of the government expenditureprocess, a realistic outcome in the spirit of Barro's. We showhow the risk--free--debt--only economy confronts the Ramsey plannerwith additional constraints on equilibrium allocations thattake the form of a sequence of measurability conditions.We solve the Ramsey problem by formulating it in terms of a Lagrangian,and applying a Parameterized Expectations Algorithm tothe associated first--order conditions. The first--order conditions andnumerical impulse response functions partially affirmBarro's random walk outcome. Though the behaviors oftax rates, government surpluses, and government debts differ, allocationsare very close for computed Ramsey policies across incomplete and completemarkets economies.

Asset pricing with idiosyncratic risk and overlapping generations

A number of existing studies have concluded that risk sharing allocations supported by competitive, incomplete markets equilibria are quantitatively close to first-best. Equilibrium asset prices in these models have been difficult to distinguish from those associated with a complete markets model, the counterfactual features of which have been widely documented. This paper asks if life cycle considerations, in conjunction with persistent idiosyncratic shocks which become more volatile during aggregate downturns, can reconcile the quantitative properties of the competitive asset pricing framework with those of observed asset returns. We begin by arguing that data from the Panel Study on Income Dynamics support the plausibility of such a shock process. Our estimates suggest a high degree of persistence as well as a substantial increase in idiosyncratic conditional volatility coincident with periods of low growth in U.S. GNP. When these factors are incorporated in a stationary overlapping generations framework, the implications for the returns on risky assets are substantial. Plausible parameterizations of our economy are able to generate Sharpe ratios which match those observed in U.S. data. Our economy cannot, however, account for the level of variability of stock returns, owing in large part to the specification of its production technology.

Heterotrimeric Go protein links Wnt-Frizzled signaling with ankyrins to regulate the neuronal microtubule cytoskeleton.

Drosophila neuromuscular junctions (NMJs) represent a powerful model system with which to study glutamatergic synapse formation and remodeling. Several proteins have been implicated in these processes, including components of canonical Wingless (Drosophila Wnt1) signaling and the giant isoforms of the membrane-cytoskeleton linker Ankyrin 2, but possible interconnections and cooperation between these proteins were unknown. Here, we demonstrate that the heterotrimeric G protein Go functions as a transducer of Wingless-Frizzled 2 signaling in the synapse. We identify Ankyrin 2 as a target of Go signaling required for NMJ formation. Moreover, the Go-ankyrin interaction is conserved in the mammalian neurite outgrowth pathway. Without ankyrins, a major switch in the Go-induced neuronal cytoskeleton program is observed, from microtubule-dependent neurite outgrowth to actin-dependent lamellopodial induction. These findings describe a novel mechanism regulating the microtubule cytoskeleton in the nervous system. Our work in Drosophila and mammalian cells suggests that this mechanism might be generally applicable in nervous system development and function.

Molecular and functional characterization of a novel cardiac-specific human tropomyosin isoform.

BACKGROUND: Tropomyosin (TM), an essential actin-binding protein, is central to the control of calcium-regulated striated muscle contraction. Although TPM1alpha (also called alpha-TM) is the predominant TM isoform in human hearts, the precise TM isoform composition remains unclear. METHODS AND RESULTS: In this study, we quantified for the first time the levels of striated muscle TM isoforms in human heart, including a novel isoform called TPM1kappa. By developing a TPM1kappa-specific antibody, we found that the TPM1kappa protein is expressed and incorporated into organized myofibrils in hearts and that its level is increased in human dilated cardiomyopathy and heart failure. To investigate the role of TPM1kappa in sarcomeric function, we generated transgenic mice overexpressing cardiac-specific TPM1kappa. Incorporation of increased levels of TPM1kappa protein in myofilaments leads to dilated cardiomyopathy. Physiological alterations include decreased fractional shortening, systolic and diastolic dysfunction, and decreased myofilament calcium sensitivity with no change in maximum developed tension. Additional biophysical studies demonstrate less structural stability and weaker actin-binding affinity of TPM1kappa compared with TPM1alpha. CONCLUSIONS: This functional analysis of TPM1kappa provides a possible mechanism for the consequences of the TM isoform switch observed in dilated cardiomyopathy and heart failure patients.

Moral hazard and non-exclusive contracts

This paper studies equilibria for economies characterized by moral hazard(hidden action), in which the set of contracts marketed in equilibrium isdetermined by the interaction of financial intermediaries.The crucial aspect of the environment that we study is thatintermediaries are restricted to trade non-exclusive contracts: theagents' contractual relationships with competing intermediaries cannot bemonitored (or are not contractible upon). We fully characterize equilibrium allocations and contracts. In thisset-up equilibrium allocations are clearly incentive constrainedinefficient. A robust property of equilibria with non-exclusivity isthat the contracts issued in equilibrium do not implement the optimalaction. Moreover we prove that, whenever equilibrium contracts doimplement the optimal action, intermediaries make positive profits andequilibrium allocations are third best inefficient (where the definitionof third best efficiency accounts for constraints which capture thenon-exclusivity of contracts).

Reflections on gains and losses: A 2x2x7 experiment

We test whether risk attitudes change when losses instead of gains areinvolved. The study of gain-loss asymmetries has been largely confinedto reflected choices, where all the money amounts of a positiveprospect are multiplied by minus one. We define the decomposition reflection = translation + probability switch, and experimentally findboth a translation effect (risk attraction becomes more frequent whengains are translated into losses) and a probability switch effect (riskattraction becomes more frequent when the probability of the best outcomedecreases). Surprisingly, the switch effect is somewhat stronger than thetranslation effect, negating a conventional reflection effect when onestarts with choices between gains with a low probability of the bestoutcome. We conclude by arguing that, while both the translation effectand the switch effect contradict the expected utility hypothesis, thetranslation effect implies a deeper violation of standard preference theory.

Bargaining efficiency and screening: An experimental investigation

This paper investigates whether information about fairness types canbe useful in lowering dispute costs and enhancing bargaining efficiency.An experiment was conducted in which subjects were first screened usinga dictator game, with the allocations chosen used to separate participantsinto two types. Mutually anonymous pairs of subjects then bargained, witha dispute cost structure imposed. Sorting with identification reducesdispute costs; there are also significant differences in bargainingefficiency across pairing types. Information about types is crucial forthese differences and also strongly affects the relative bargainingsuccess of the two types and the hypothetical optimal bargaining strategy.

Cannabis use trajectories among Swiss adolescents

Introduction: Swiss data indicate that one fifth of current 16-20 yearold cannabis users do not use tobacco and seem to do better than those smoking both substances. The aim of this research is to assess the substance use trajectories of cannabis users who do not use tobacco and those who use both substances from age 17 to age 23. Methods: Using data from the TREE longitudinal data base, 328 out of 1796 youth 18.3%; 45% females) who smoked cannabis only (Group CAN; N = 46; 36% females) or concurrently with tobacco (Group CANTAB; N = 284; 46% females) at T1 (2001; age 17) were followed at T4 (2004; age 20) and T7 (2007; age 23). Two additional outcome groups were included at T4 and T7: those using only tobacco (Group TOB) and those not using any of these substances (Group NONE). Data were analyzed separately by gender. Results: Females in group CAN at T1 were as likely to be in group TOB (35%) or NONE (35%) at T4 and the percentages increased to 41% and 47%, respectively, at T7. Males in group CAN at T1 were more likely to be in group TOB at T4 (33%) and T7 (61%) than in group NONE (23% and 15%, respectively). Females in group CANTOB at T1 were mainly in group TOB at T4 (52%) and T7 (61%), while males in CANTOB at T1 remained mainly in the same group at T4 (75%) and T7 (61%). Only 10% of females and 5% of males in group CANTOB at T1 were in group NONE at T4 and 15% and 12%, respectively, at T7. Conclusions: Adolescents using only cannabis are globally less likely to continue using cannabis in young adulthood than those using both substances, although a fair percentage (specially males) switch to tobacco use. This result confirms previous research indicating that nicotine dependence and persistent cigarette smoking may be the main public health consequences of cannabis use. A gender difference arises among those using tobacco and cannabis at age 17: while females become mainly tobacco smokers, the majority of males continue to use both substances. Although these results could be explained by a substitution effect, teenagers using both substances seem to have gone beyond the experimentation phase and should be a motive for concern.