Dynamic adverse selection and debt

This paper argues that the strategic use of debt favours the revelationof information in dynamic adverse selection problems. Our argument is basedon the idea that debt is a credible commitment to end long term relationships.Consequently, debt encourages a privately informed party to disclose itsinformation at early stages of a relationship. We illustrate our pointwith the financing decision of a monopolist selling a good to a buyerwhose valuation is private information. A high level of (renegotiable)debt, by increasing the scope for liquidation, may induce the highvaluation buyer to buy early at a high price and thus increase themonopolist's expected payoff. By affecting the buyer's strategy, it mayreduce the probability of excessive liquidation. We investigate theconsequences of good durability and we examine the way debt mayalleviate the ratchet effect.

Long-run selection and the work ethic

That individuals contribute in social dilemma interactions even when contributing is costly is a well-established observation in the experimental literature. Since a contributor is always strictly worse off than a non-contributor the question is raised if an intrinsic motivation to contribute can survive in an evolutionary setting. Using recent results on deterministic approximation of stochastic evolutionary dynamics we give conditions for equilibria with a positive number of contributors to be selected in the long run.

Equilibrium selection through incomplete information in coordination games: An experimental study

We perform an experiment on a pure coordination game with uncertaintyabout the payoffs. Our game is closely related to models that have beenused in many macroeconomic and financial applications to solve problemsof equilibrium indeterminacy. In our experiment each subject receives anoisy signal about the true payoffs. This game has a unique strategyprofile that survives the iterative deletion of strictly dominatedstrategies (thus a unique Nash equilibrium). The equilibrium outcomecoincides, on average, with the risk-dominant equilibrium outcome ofthe underlying coordination game. The behavior of the subjects convergesto the theoretical prediction after enough experience has been gained. The data (and the comments) suggest that subjects do not apply through"a priori" reasoning the iterated deletion of dominated strategies.Instead, they adapt to the responses of other players. Thus, the lengthof the learning phase clearly varies for the different signals. We alsotest behavior in a game without uncertainty as a benchmark case. The gamewith uncertainty is inspired by the "global" games of Carlsson and VanDamme (1993).

Optimal contracts, adverse selection and social preferences: An experiment

It has long been standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we feel that it may be useful to consider nonpecuniary utility in mechanism design and contract theory. Accordingly, we devise an experiment to explore optimal contracts in an adverse-selection context. A principal proposes one of three contract menus, each of which offers a choice of two incentive-compatible contracts, to two agents whose types are unknown to the principal. The agents know the set of possible menus, and choose to either accept one of the two contracts offered in the proposed menu or to reject the menu altogether; a rejection by either agent leads to lower (and equal) reservation payoffs for all parties. While all three possible menus favor the principal, they do so to varying degrees. We observe numerous rejections of the more lopsided menus, and approach an equilibrium where one of the more equitable contract menus (which one depends on the reservation payoffs) is proposed and agents accept a contract, selecting actions according to their types. Behavior is largely consistent with all recent models of social preferences, strongly suggesting there is value in considering nonpecuniary utility in agency theory.

Loss of phenotypic plasticity generates genotype-caste association in harvester ants.

Caste differentiation and reproductive division of labor are the hallmarks of insect societies. In ants and other social Hymenoptera, development of female larvae into queens or workers generally results from environmentally induced differences in gene expression. However, several cases in which certain gene combinations may determine reproductive status have been described in bees and ants. We investigated experimentally whether genotype directly influences caste determination in two populations of Pogonomyrmex harvester ants in which genotype-caste associations have been observed. Each population contains two genetic lineages. Queens are polyandrous and mate with males of both lineages , but in mature colonies, over 95% of daughter queens have a pure-lineage genome, whereas all workers are of F1 interlineage ancestry. We found that this pattern is maintained throughout the colony life cycle, even when only a single caste is being produced. Through controlled crosses, we demonstrate that pure-lineage eggs fail to develop into workers even when interlineage brood are not present. Thus, environmental caste determination in these individuals appears to have been lost in favor of a hardwired genetic mechanism. Our results reveal that genetic control of reproductive fate can persist without loss of the eusocial caste structure.

KIT mutations and dose selection for imatinib in patients with advanced gastrointestinal stromal tumours.

A recent randomized EORTC phase III trial, comparing two doses of imatinib in patients with advanced gastrointestinal stromal tumours (GISTs), reported dose dependency for progression-free survival. The current analysis of that study aimed to assess if tumour mutational status correlates with clinical response to imatinib. Pre-treatment samples of GISTs from 377 patients enrolled in phase III study were analyzed for mutations of KIT or PDGFRA by combination of D-HPLC and direct sequencing of tumour genomic DNA. Mutation types were correlated with patients' survival data. The presence of exon 9-activating mutations in KIT was the strongest adverse prognostic factor for response to imatinib, increasing the relative risk of progression by 171% (P<0.0001) and the relative risk of death by 190% (P<0.0001) when compared with KIT exon 11 mutants. Similarly, the relative risk of progression was increased by 108% (P<0.0001) and the relative risk of death by 76% (P=0.028) in patients without detectable KIT or PDGFRA mutations. In patients whose tumours expressed an exon 9 KIT oncoprotein, treatment with the high-dose regimen resulted in a significantly superior progression-free survival (P=0.0013), with a reduction of the relative risk of 61%. We conclude that tumour genotype is of major prognostic significance for progression-free survival and overall survival in patients treated with imatinib for advanced GISTs. Our findings suggest the need for differential treatment of patients with GISTs, with KIT exon 9 mutant patients benefiting the most from the 800 mg daily dose of the drug.

Adaptive model selection using empirical complexities

Given $n$ independent replicates of a jointly distributed pair $(X,Y)\in {\cal R}^d \times {\cal R}$, we wish to select from a fixed sequence of model classes ${\cal F}_1, {\cal F}_2, \ldots$ a deterministic prediction rule $f: {\cal R}^d \to {\cal R}$ whose risk is small. We investigate the possibility of empirically assessingthe {\em complexity} of each model class, that is, the actual difficulty of the estimation problem within each class. The estimated complexities are in turn used to define an adaptive model selection procedure, which is based on complexity penalized empirical risk.The available data are divided into two parts. The first is used to form an empirical cover of each model class, and the second is used to select a candidate rule from each cover based on empirical risk. The covering radii are determined empirically to optimize a tight upper bound on the estimation error. An estimate is chosen from the list of candidates in order to minimize the sum of class complexity and empirical risk. A distinguishing feature of the approach is that the complexity of each model class is assessed empirically, based on the size of its empirical cover.Finite sample performance bounds are established for the estimates, and these bounds are applied to several non-parametric estimation problems. The estimates are shown to achieve a favorable tradeoff between approximation and estimation error, and to perform as well as if the distribution-dependent complexities of the model classes were known beforehand. In addition, it is shown that the estimate can be consistent,and even possess near optimal rates of convergence, when each model class has an infinite VC or pseudo dimension.For regression estimation with squared loss we modify our estimate to achieve a faster rate of convergence.

Characterization of a new clinical yeast species, Candida tunisiensis sp. nov., isolated from a strain collection from Tunisian hospitals.

From a collection of yeast isolates isolated from patients in Tunisian hospitals between September 2006 and July 2010, the yeast strain JEY63 (CBS 12513), isolated from a 50-year-old male that suffered from oral thrush, could not be identified to the species level using conventional methods used in clinical laboratories. These methods include matrix-assisted laser desorption ionization-time of flight mass spectrometry (MALDI-TOF MS), germ tube formation, and the use of CHROMagar Candida and metabolic galleries. Sequence analysis of the nuclear rRNA (18S rRNA, 5.8S rRNA, and 26S rRNA) and internal transcribed spacer regions (ITS1 and ITS2) indicated that the ribosomal DNA sequences of this species were not yet reported. Multiple gene phylogenic analyses suggested that this isolate clustered at the base of the Dipodascaceae (Saccharomycetales, Saccharomycetes, and Ascomycota). JEY63 was named Candida tunisiensis sp. nov. according to several phenotypic criteria and its geographical origin. C. tunisiensis was able to grow at 42°C and does not form chlamydospores and hyphae but could grow as yeast and pseudohyphal forms. C. tunisiensis exhibited most probably a haploid genome with an estimated size of 10 Mb on at least three chromosomes. Using European Committee for Antimicrobial Susceptibility Testing (EUCAST) and Clinical and Laboratory Standards Institute (CLSI) Candida albicans susceptibility breakpoints as a reference, C. tunisiensis was resistant to fluconazole (MIC = 8 μg/ml), voriconazole (MIC = 0.5 μg/ml), itraconazole (MIC = 16 μg/ml), and amphotericin B (MIC = 4 μg/ml) but still susceptible to posaconazole (MIC = 0.008 μg/ml) and caspofungin (MIC = 0.5 μg/ml). In conclusion, MALDI-TOF MS permitted the early selection of an unusual isolate, which was still unreported in molecular databases but could not be unambiguously classified based on phylogenetic approaches.

Revealed preference and indifferent selection

It is shown that preferences can be constructed from observed choice behavior in a way that is robust to indifferent selection (i.e., the agent is indifferent between two alternatives but, nevertheless, is only observed selecting one of them). More precisely, a suggestion by Savage (1954) to reveal indifferent selection by considering small monetary perturbations of alternatives is formalized and generalized to a purely topological framework: references over an arbitrary topological space can be uniquely derived from observed behavior under the assumptions that they are continuous and nonsatiated and that a strictly preferred alternative is always chosen, and indifferent selection is then characterized by discontinuity in choice behavior. Two particular cases are then analyzed: monotonic preferences over a partially ordered set, and preferences representable by a continuous pseudo-utility function.

Local selection rules that can determine specific pathways of DNA unknotting by type II DNA topoisomerases.

We performed numerical simulations of DNA chains to understand how local geometry of juxtaposed segments in knotted DNA molecules can guide type II DNA topoisomerases to perform very efficient relaxation of DNA knots. We investigated how the various parameters defining the geometry of inter-segmental juxtapositions at sites of inter-segmental passage reactions mediated by type II DNA topoisomerases can affect the topological consequences of these reactions. We confirmed the hypothesis that by recognizing specific geometry of juxtaposed DNA segments in knotted DNA molecules, type II DNA topoisomerases can maintain the steady-state knotting level below the topological equilibrium. In addition, we revealed that a preference for a particular geometry of juxtaposed segments as sites of strand-passage reaction enables type II DNA topoisomerases to select the most efficient pathway of relaxation of complex DNA knots. The analysis of the best selection criteria for efficient relaxation of complex knots revealed that local structures in random configurations of a given knot type statistically behave as analogous local structures in ideal geometric configurations of the corresponding knot type.

A model of collateral, investment and adverse selection

This paper characterizes the relationship between entrepreneurial wealth and aggregate investmentunder adverse selection. Its main finding is that such a relationship need not bemonotonic. In particular, three results emerge from the analysis: (i) pooling equilibria, in whichinvestment is independent of entrepreneurial wealth, are more likely to arise when entrepreneurialwealth is relatively low; (ii) separating equilibria, in which investment is increasing inentrepreneurial wealth, are most likely to arise when entrepreneurial wealth is relatively highand; (iii) for a given interest rate, an increase in entrepreneurial wealth may generate a discontinuousfall in investment.

Model selection and error estimation

We study model selection strategies based on penalized empirical loss minimization. We point out a tight relationship between error estimation and data-based complexity penalization: any good error estimate may be converted into a data-based penalty function and the performance of the estimate is governed by the quality of the error estimate. We consider several penalty functions, involving error estimates on independent test data, empirical {\sc vc} dimension, empirical {\sc vc} entropy, andmargin-based quantities. We also consider the maximal difference between the error on the first half of the training data and the second half, and the expected maximal discrepancy, a closely related capacity estimate that can be calculated by Monte Carlo integration. Maximal discrepancy penalty functions are appealing for pattern classification problems, since their computation is equivalent to empirical risk minimization over the training data with some labels flipped.

Adaptive sequence evolution in a color gene involved in the formation of the characteristic egg-dummies of male haplochromine cichlid fishes.

BACKGROUND: The exceptionally diverse species flocks of cichlid fishes in East Africa are prime examples of parallel adaptive radiations. About 80% of East Africa's more than 1 800 endemic cichlid species, and all species of the flocks of Lakes Victoria and Malawi, belong to a particularly rapidly evolving lineage, the haplochromines. One characteristic feature of the haplochromines is their possession of egg-dummies on the males' anal fins. These egg-spots mimic real eggs and play an important role in the mating system of these maternal mouthbrooding fish. RESULTS: Here, we show that the egg-spots of haplochromines are made up of yellow pigment cells, xanthophores, and that a gene coding for a type III receptor tyrosine kinase, colony-stimulating factor 1 receptor a (csf1ra), is expressed in egg-spot tissue. Molecular evolutionary analyses reveal that the extracellular ligand-binding and receptor-interacting domain of csf1ra underwent adaptive sequence evolution in the ancestral lineage of the haplochromines, coinciding with the emergence of egg-dummies. We also find that csf1ra is expressed in the egg-dummies of a distantly related cichlid species, the ectodine cichlid Ophthalmotilapia ventralis, in which markings with similar functions evolved on the pelvic fin in convergence to those of the haplochromines. CONCLUSION: We conclude that modifications of existing signal transduction mechanisms might have evolved in the haplochromine lineage in association with the origination of anal fin egg-dummies. That positive selection has acted during the evolution of a color gene that seems to be involved in the morphogenesis of a sexually selected trait, the egg-dummies, highlights the importance of further investigations of the comparative genomic basis of the phenotypic diversification of cichlid fishes.

Variable phenotypic expressivity in a Swiss family with autosomal dominant retinitis pigmentosa due to a T494M mutation in the PRPF3 gene.

PURPOSE: To characterize the clinical, psychophysical, and electrophysiological phenotypes in a five-generation Swiss family with dominantly inherited retinitis pigmentosa caused by a T494M mutation in the Precursor mRNA-Processing factor 3 (PRPF3) gene, and to relate the phenotype to the underlying genetic mutation. METHODS: Eleven affected patients were ascertained for phenotypic and genotypic characterization. Ophthalmologic evaluations included color vision testing, Goldmann perimetry, and digital fundus photography. Some patients had autofluorescence imaging, Optical Coherence Tomography, and ISCEV-standard full-field electroretinography. All affected patients had genetic testing. RESULTS: The age of onset of night blindness and the severity of the progression of the disease varied between members of the family. Some patients reported early onset of night blindness at age three, with subsequent severe deterioration of visual acuity, which was 0.4 in the best eye after their fifties. The second group of patients had a later onset of night blindness, in the mid-twenties, with a milder disease progression and a visual acuity of 0.8 at age 70. Fundus autofluorescence imaging and electrophysiological and visual field abnormalities also showed some degree of varying phenotypes. The autofluorescence imaging showed a large high-density ring bilaterally. Myopia (range: -0.75 to -8) was found in 10/11 affected subjects. Fundus findings showed areas of atrophy along the arcades. A T494M change was found in exon 11 of the PRPF3 gene. The change segregates with the disease in the family. CONCLUSIONS: A mutation in the PRPF3 gene is rare compared to other genes causing autosomal dominant retinitis pigmentosa (ADRP). Although a T494M change has been reported, the family in our study is the first with variable expressivity. Mutations in the PRPF3 gene can cause a variable ADRP phenotype, unlike in the previously described Danish, English, and Japanese families. Our report, based on one of the largest affected pedigree, provides a better understanding as to the phenotype/genotype description of ADRP caused by a PRPF3 mutation.

Egg laying site selection by a host plant specialist leaf miner moth at two intra-plant levels in the northern Chilean Atacama Desert

Egg laying site selection by a host plant specialist leaf miner moth at two intra-plant levels in the northern Chilean Atacama Desert. The spatial distribution of the immature stages of the leaf miner Angelabella tecomae Vargas & Parra, 2005 was determined at two intra-plant levels (shoot and leaflet) on the shrub Tecoma fulva fulva (Cav.) D. Don (Bignoniaceae) in the Azapa valley, northern Chilean Atacama Desert. An aggregated spatial pattern was detected for all the immature stages along the shoot, with an age dependent relative position: eggs and first instar larvae were clumped at apex; second, third and fourth instar larvae were mostly found at intermediate positions; meanwhile the spinning larva and pupa were clumped at basis. This pattern suggests that the females select new, actively growing leaflets for egg laying. At the leaflet level, the immature stages were found more frequently at underside. Furthermore, survivorship was higher for larvae from underside mines. All these results highlight the importance of an accurate selection of egg laying site in the life history of this highly specialized leaf miner. By contrast, eventual wrong choices in the egg laying site selection may be associated with diminished larval survivorship. The importance of the continuous availability of new plant tissue in this highly human modified arid environment is discussed in relation with the observed patterns.