EGASP: the human ENCODE Genome Annotation Assessment Project

Background: We present the results of EGASP, a community experiment to assess the state-ofthe-art in genome annotation within the ENCODE regions, which span 1% of the human genomesequence. The experiment had two major goals: the assessment of the accuracy of computationalmethods to predict protein coding genes; and the overall assessment of the completeness of thecurrent human genome annotations as represented in the ENCODE regions. For thecomputational prediction assessment, eighteen groups contributed gene predictions. Weevaluated these submissions against each other based on a ‘reference set’ of annotationsgenerated as part of the GENCODE project. These annotations were not available to theprediction groups prior to the submission deadline, so that their predictions were blind and anexternal advisory committee could perform a fair assessment.Results: The best methods had at least one gene transcript correctly predicted for close to 70%of the annotated genes. Nevertheless, the multiple transcript accuracy, taking into accountalternative splicing, reached only approximately 40% to 50% accuracy. At the coding nucleotidelevel, the best programs reached an accuracy of 90% in both sensitivity and specificity. Programsrelying on mRNA and protein sequences were the most accurate in reproducing the manuallycurated annotations. Experimental validation shows that only a very small percentage (3.2%) of the selected 221 computationally predicted exons outside of the existing annotation could beverified.Conclusions: This is the first such experiment in human DNA, and we have followed thestandards established in a similar experiment, GASP1, in Drosophila melanogaster. We believe theresults presented here contribute to the value of ongoing large-scale annotation projects and shouldguide further experimental methods when being scaled up to the entire human genome sequence.

Angle Parking on Iowa's Low Volume Primary Extentions in Small Towns, January 2003

On-street parking has been considered problematic by engineers for many years. In fact, numerous studies have concluded that diagonal or angle parking in particular is potentially more of a safety concern than parallel or no parking at all. It is a common position of many states, including Iowa, to discourage or completely prohibit angle parking on primary road extensions in urban areas. However, with the acceptance of “context sensitive design” and traffic calming techniques, policies for on-street parking are receiving re -consideration in many agencies including the FHWA. This study was undertaken to analyze operational and safety histories in the state of Iowa where various types of on-street parking have existed for many years, concentrating in particular on smaller communities. Specifically of interest was a comparison of diagonal parking locations to other types with regard to related crash histories. If possible, it was intended to develop guidelines to assist Iowa Department of Transportation designers in the consideration of parking requirements for road improvements through small communities. In this regard, several criteria were analyzed to determine possible contribution to crash history including road width, clearance to parked vehicles, traffic volumes, community population, and length of parking area. None of these factors, with the possible exception of population, displayed a clearly definable relationship to crash history. However, when average crash rates for various parking types were compared for non-intersection crashes, differences in rates between areas with diagonal parking and those with parallel parking were almost negligible. In fact, those observed rates were less than sample locations with no parking at all. These results seem to indicate that indeed there may exist no compelling justification for blanket prohibition of angle parking along Iowa’s primary extensions in all urban areas. Rather, a case-by-case investigation with each project design of the most applicable parking type would seem appropriate in smaller communities.

Separation of small metabolites and lipids in spectra from biopsies by diffusion-weighted HR-MAS NMR: a feasibility study.

High Resolution Magic Angle Spinning (HR-MAS) NMR allows metabolic characterization of biopsies. HR-MAS spectra from tissues of most organs show strong lipid contributions that are overlapping metabolite regions, which hamper metabolite estimation. Metabolite quantification and analysis would benefit from a separation of lipids and small metabolites. Generally, a relaxation filter is used to reduce lipid contributions. However, the strong relaxation filter required to eliminate most of the lipids also reduces the signals for small metabolites. The aim of our study was therefore to investigate different diffusion editing techniques in order to employ diffusion differences for separating lipid and small metabolite contributions in the spectra from different organs for unbiased metabonomic analysis. Thus, 1D and 2D diffusion measurements were performed, and pure lipid spectra that were obtained at strong diffusion weighting (DW) were subtracted from those obtained at low DW, which include both small metabolites and lipids. This subtraction yielded almost lipid free small metabolite spectra from muscle tissue. Further improved separation was obtained by combining a 1D diffusion sequence with a T2-filter, with the subtraction method eliminating residual lipids from the spectra. Similar results obtained for biopsies of different organs suggest that this method is applicable in various tissue types. The elimination of lipids from HR-MAS spectra and the resulting less biased assessment of small metabolites have potential to remove ambiguities in the interpretation of metabonomic results. This is demonstrated in a reproducibility study on biopsies from human muscle.

Supporting life-long competence development using the TENCompetence infrastructure: a first experiment

This paper describes an experiment to explore the effects of the TENCompetence infrastructure for supporting lifelong competence development which is now in development. This infrastructure provides structured, multi-leveled access to learning materials, based upon competences. People can follow their own learning path, supported by a listing of competences and their components, by competence development plans attached to competences and by the possibility to mark elements as complete. We expected the PCM to have an effect on (1) control of participants of their own learning, and (2) appreciation of their learning route, (3) of the learning resources, (4) of their competence development, and (5) of the possibilities of collaboration. In the experiment, 44 Bulgarian teachers followed a distance learning course on a specific teaching methodology for six weeks. Part of them used the TENCompetence infrastructure, part used an infrastructure which was similar, except for the characterizing elements mentioned above. The results showed that in the experimental condition, more people passed the final competence assess-ment, and people felt more in control of their own learning. No differences between the two groups were found on the amount and appreciation of collaboration and on further measures of competence development.

Event-related potential analyses via single-subject topographic classification.

Introduction: Responses to external stimuli are typically investigated by averaging peri-stimulus electroencephalography (EEG) epochs in order to derive event-related potentials (ERPs) across the electrode montage, under the assumption that signals that are related to the external stimulus are fixed in time across trials. We demonstrate the applicability of a single-trial model based on patterns of scalp topographies (De Lucia et al, 2007) that can be used for ERP analysis at the single-subject level. The model is able to classify new trials (or groups of trials) with minimal a priori hypotheses, using information derived from a training dataset. The features used for the classification (the topography of responses and their latency) can be neurophysiologically interpreted, because a difference in scalp topography indicates a different configuration of brain generators. An above chance classification accuracy on test datasets implicitly demonstrates the suitability of this model for EEG data. Methods: The data analyzed in this study were acquired from two separate visual evoked potential (VEP) experiments. The first entailed passive presentation of checkerboard stimuli to each of the four visual quadrants (hereafter, "Checkerboard Experiment") (Plomp et al, submitted). The second entailed active discrimination of novel versus repeated line drawings of common objects (hereafter, "Priming Experiment") (Murray et al, 2004). Four subjects per experiment were analyzed, using approx. 200 trials per experimental condition. These trials were randomly separated in training (90%) and testing (10%) datasets in 10 independent shuffles. In order to perform the ERP analysis we estimated the statistical distribution of voltage topographies by a Mixture of Gaussians (MofGs), which reduces our original dataset to a small number of representative voltage topographies. We then evaluated statistically the degree of presence of these template maps across trials and whether and when this was different across experimental conditions. Based on these differences, single-trials or sets of a few single-trials were classified as belonging to one or the other experimental condition. Classification performance was assessed using the Receiver Operating Characteristic (ROC) curve. Results: For the Checkerboard Experiment contrasts entailed left vs. right visual field presentations for upper and lower quadrants, separately. The average posterior probabilities, indicating the presence of the computed template maps in time and across trials revealed significant differences starting at ~60-70 ms post-stimulus. The average ROC curve area across all four subjects was 0.80 and 0.85 for upper and lower quadrants, respectively and was in all cases significantly higher than chance (unpaired t-test, p<0.0001). In the Priming Experiment, we contrasted initial versus repeated presentations of visual object stimuli. Their posterior probabilities revealed significant differences, which started at 250ms post-stimulus onset. The classification accuracy rates with single-trial test data were at chance level. We therefore considered sub-averages based on five single trials. We found that for three out of four subjects' classification rates were significantly above chance level (unpaired t-test, p<0.0001). Conclusions: The main advantage of the present approach is that it is based on topographic features that are readily interpretable along neurophysiologic lines. As these maps were previously normalized by the overall strength of the field potential on the scalp, a change in their presence across trials and between conditions forcibly reflects a change in the underlying generator configurations. The temporal periods of statistical difference between conditions were estimated for each training dataset for ten shuffles of the data. Across the ten shuffles and in both experiments, we observed a high level of consistency in the temporal periods over which the two conditions differed. With this method we are able to analyze ERPs at the single-subject level providing a novel tool to compare normal electrophysiological responses versus single cases that cannot be considered part of any cohort of subjects. This aspect promises to have a strong impact on both basic and clinical research.

Testing for local adaptation in brown trout using reciprocal transplants.

ABSTRACT: BACKGROUND: Local adaptation can drive the divergence of populations but identification of the traits under selection remains a major challenge in evolutionary biology. Reciprocal transplant experiments are ideal tests of local adaptation, yet rarely used for higher vertebrates because of the mobility and potential invasiveness of non-native organisms. Here, we reciprocally transplanted 2500 brown trout (Salmo trutta) embryos from five populations to investigate local adaptation in early life history traits. Embryos were bred in a full-factorial design and raised in natural riverbeds until emergence. Customized egg capsules were used to simulate the natural redd environment and allowed tracking the fate of every individual until retrieval. We predicted that 1) within sites, native populations would outperform non-natives, and 2) across sites, populations would show higher performance at 'home' compared to 'away' sites. RESULTS: There was no evidence for local adaptation but we found large differences in survival and hatching rates between sites, indicative of considerable variation in habitat quality. Survival was generally high across all populations (55% +/- 3%), but ranged from 4% to 89% between sites. Average hatching rate was 25% +/- 3% across populations ranging from 0% to 62% between sites. CONCLUSION: This study provides rare empirical data on variation in early life history traits in a population network of a salmonid, and large-scale breeding and transplantation experiments like ours provide powerful tests for local adaptation. Despite the recently reported genetic and morphological differences between the populations in our study area, local adaptation at the embryo level is small, non-existent, or confined to ecological conditions that our experiment could not capture.

Swain: Stata module to correct the SEM chi-square overidentification test in small sample sizes or complex models. Statistical Software Components S457617, Boston College Department of Economics.

Swain corrects the chi-square overidentification test (i.e., likelihood ratio test of fit) for structural equation models whethr with or without latent variables. The chi-square statistic is asymptotically correct; however, it does not behave as expected in small samples and/or when the model is complex (cf. Herzog, Boomsma, & Reinecke, 2007). Thus, particularly in situations where the ratio of sample size (n) to the number of parameters estimated (p) is relatively small (i.e., the p to n ratio is large), the chi-square test will tend to overreject correctly specified models. To obtain a closer approximation to the distribution of the chi-square statistic, Swain (1975) developed a correction; this scaling factor, which converges to 1 asymptotically, is multiplied with the chi-square statistic. The correction better approximates the chi-square distribution resulting in more appropriate Type 1 reject error rates (see Herzog & Boomsma, 2009; Herzog, et al., 2007).

Chlamydiaceae and Chlamydia-like organisms in free-living small mammals in Europe and Afghanistan.

Few data are available on the occurrence of chlamydial infections in wild small mammals. We investigated the significance of free-living small mammals as reservoirs or transmission hosts for microorganisms of the phylum/class Chlamydiae. We obtained 3,664 tissue samples from 911 animals in Switzerland, Germany, Austria, the Czech Republic, and Afghanistan. Samples included internal organs (n = 3,652) and feces (n = 12) from 679 rodents (order Rodentia) and 232 insectivores (order Soricomorpha) and were tested by three TaqMan® real-time PCRs specific for members of the family Chlamydiaceae and selected Chlamydia-like organisms such as Parachlamydia spp. and Waddlia spp. Only one of 911 (0.11%) animals exhibited a questionable positive result by Chlamydiaceae-specific real-time PCR. Five of 911 animals were positive by specific real-time PCR for Parachlamydia spp. but could not be confirmed by quantitative PCR targeting the Parachlamydia acanthamoebae secY gene (secY qPCR). One of 746 animals (0.13%) was positive by real-time PCR for Waddlia chondrophila. This result was confirmed by Waddlia secY qPCR. This is the first detection of Chlamydia-like organisms in small wildlife in Switzerland. Considering previous negative results for Chlamydiaceae in wild ruminant species from Switzerland, these data suggest that wild small mammals are unlikely to be important carriers or transport hosts for Chamydiaceae and Chlamydia-like organisms.

Diversity of staphylococcal cassette chromosome mec elements in predominant methicillin-resistant Staphylococcus aureus clones in a small geographic area.

Recent population genetic studies suggest that staphylococcal cassette chromosome mec (SCCmec) was acquired much more frequently than previously thought. In the present study, we aimed to investigate the diversity of SCCmec elements in a local methicillin-resistant Staphylococcus aureus (MRSA) population. Each MRSA isolate (one per patient) recovered in the Vaud canton of Switzerland from January 2005 to December 2008 was analyzed by the double-locus sequence typing (DLST) method and SCCmec typing. DLST analysis indicated that 1,884/2,036 isolates (92.5%) belong to four predominant clones. As expected from the local spread of a clone, most isolates within clones harbored an identical SCCmec type. However, three to seven SCCmec types have been recovered in every predominant DLST clone, suggesting that some of these elements might have been acquired locally. This pattern could also be explained by distinct importations of related isolates into the study region. The addition of a third highly variable locus to further increase the discriminatory power of typing as well as epidemiological data suggested that most ambiguous situations were explained by the second hypothesis. In conclusion, our study showed that even if the acquisition of new SCCmec elements at a local level likely occurs, it does not explain all the diversity observed in the study region.

Health Information and the Choice of Fish Species: An Experiment Measuring the Impact of Risk and Benefit Information, April 2006

An experiment was conducted in France to evaluate the impact of health information on consumers’ choice between two different types of fish. Successive messages revealing risks (methylmercury) and benefits (omega-3s) of consuming the fish, along with consumption recommendations, were delivered. Results show a significant difference of reaction according to the order and type of information. The information about risks had a larger marginal impact on change in willingness to pay (WTP) than did the information about benefits. While the results show that detailed messages on risks/benefits, including recommendations for nutrition behavior, matter in the modification of WTP, 40% of respondents did not change their initial choices after the revelation of health information.

Metamorphism and kinetics in the Torres del Paine contact aureole

Contact aureoles provide an excellent geologic environment to study the mechanisms of metamorphic reactions in a natural system. The Torres del Paine (TP) intrusion is one of the most spectacular natural laboratories because of its excellent outcrop conditions. It formed in a period from 12.59 to 12.43 Ma and consists of three large granite and four smaller mafic batches. The oldest granite is on top, the youngest at the bottom of the granitic complex, and the granites overly the mafic laccolith. The TP intruded at a depth of 2-3 km into regional metamorphic anchizone to greenschist facies pelites, sandstones, and conglomerates of the Cerro Toro and Punta Barrosa formations. It formed a thin contact aureole of 150-400 m width. This thesis focuses on the reaction kinetics of the mineral cordierite in the contact aureole using quantitative textural analysis methods. First cordierite was formed from chlorite break¬down (zone I, ca. 480 °C, 750 bar). The second cordierite forming reaction was the muscovite break-down, which is accompanied by a modal decrease in biotite and the appearance of k- feldspar (zone II, 540-550 °C, 750 bar). Crystal sizes of the roundish, poikiloblastic cordierites were determined from microscope thin section images by manually marking each crystal. Images were then automatically processed with Matlab. The correction for the intersection probability of each crystal radius yields the crystal size distribution in the rock. Samples from zone I below the laccolith have the largest crystals (0.09 mm). Cordierites from zone II are smaller, with a maximum crystal radius of 0.057 mm. Rocks from zone II have a larger number of small cordierite crystals than rocks from zone I. A combination of these quantitative analysis with numerical modeling of nucleation and growth, is used to infer nucleation and growth parameters which are responsible for the observed mineral textures. For this, the temperature-time paths of the samples need to be known. The thermal history is complex because the main body of the intrusion was formed by several intrusive batches. The emplacement mechanism and duration of each batch can influence the thermal structure in the aureole. A possible subdivision of batches in smaller increments, so called pulses, will focus heat at the side of the intrusion. Focusing all pulses on one side increases the contact aureole size on that side, but decreases it on the other side. It forms a strongly asymmetric contact aureole. Detailed modeling shows that the relative thicknesses of the TP contact aureole above and below the intrusion (150 and 400 m) are best explained by a rapid emplacement of at least the oldest granite batch. Nevertheless, temperatures are significantly too low in all models, compared to observed mineral assemblages in the hornfelses. Hence, an other important thermal mechanisms needs to take place in the host rock. Clastic minerals in the immature sediments outside the contact aureole are hydrated due to small amounts of expelled fluids during contact metamorphism. This leads to a temperature increase of up to 50 °C. The origin of fluids can be traced by stable isotopes. Whole rock stable isotope data (6D and δ180) and chlorine concentrations in biotite document that the TP intrusion induced only very small amounts of fluid flow. Oxygen whole rock data show δ180 values between 9.0 and 10.0 %o within the first 5 m of the contact. Values increase to 13.0 - 15.0 %o further away from the intrusion. Whole rock 6D values display a more complex zoning. First, host rock values (-90 to -70 %o) smoothly decrease towards the contact by ca. 20 %o, up to a distance of ca. 150 m. This is followed by an increase of ca. 20 %o within the innermost 150 m of the aureole (-97.0 to -78 %o at the contact). The initial decrease in 6D values is interpreted to be due to Rayleigh fractionation accompanying the dehydration reactions forming cordierite, while the final increase reflects infiltration of water-rich fluids from the intrusion. An over-estimate on the quantity and the corresponding thermal effect yields a temperature increase of less than 30 °C. This suggests that fluid flow might have contributed only for a small amount to the thermal evolution of the system. A combination of the numerical growth model with the thermal model, including the hydration reaction enthalpies but neglecting fluid flow and incremental growth, can be used to numerically reproduce the observed cordierite textures in the contact aureole. This yields kinetic parameters which indicate fast cordierite crystallization before the thermal peak in the inner aureole, and continued reaction after the thermal peak in the outermost aureole. Only small temperature dependencies of the kinetic parameters seem to be needed to explain the obtained crystal size data. - Les auréoles de contact offrent un cadre géologique privilégié pour l'étude des mécanismes de réactions métamorphiques associés à la mise en place de magmas dans la croûte terrestre. Par ses conditions d'affleurements excellentes, l'intrusion de Torres del Paine représente un site exceptionnel pour améliorer nos connaissances de ces processus. La formation de cette intrusion composée de trois injections granitiques principales et de quatre injections mafiques de volume inférieur couvre une période allant de 12.50 à 12.43 Ma. Le plus vieux granite forme la partie sommitale de l'intrusion alors que l'injection la plus jeune s'observe à la base du complexe granitique; les granites recouvrent la partie mafique du laccolite. L'intrusion du Torres del Paine s'est mise en place a 2-3 km de profondeur dans un encaissant métamorphique. Cet encaissant est caractérisé par un métamorphisme régional de faciès anchizonal à schiste vert et est composé de pélites, de grès, et des conglomérats des formations du Cerro Toro et Punta Barrosa. La mise en place des différentes injections granitiques a généré une auréole de contact de 150-400 m d'épaisseur autour de l'intrusion. Cette thèse se concentre sur la cinétique de réaction associée à la formation de la cordiérite dans les auréoles de contact en utilisant des méthodes quantitatives d'analyses de texture. On observe plusieurs générations de cordiérite dans l'auréole de contact. La première cordiérite est formée par la décomposition de la chlorite (zone I, environ 480 °C, 750 bar), alors qu'une seconde génération de cordiérite est associée à la décomposition de la muscovite, laquelle est accompagnée par une diminution modale de la teneur en biotite et l'apparition de feldspath potassique (zone II, 540-550 °C, 750 bar). Les tailles des cristaux de cordiérites arrondies et blastic ont été déterminées en utilisant des images digitalisées des lames minces et en marquant individuellement chaque cristal. Les images sont ensuite traitées automatiquement à l'aide du programme Matlab. La correction de la probabilité d'intersection en fonction du rayon des cristaux permet de déterminer la distribution de la taille des cristaux dans la roche. Les échantillons de la zone I, en dessous du lacolite, sont caractérisés par de relativement grands cristaux (0.09 mm). Les cristaux de cordiérite de la zone II sont plus petits, avec un rayon maximal de 0.057 mm. Les roches de la zone II présentent un plus grand nombre de petits cristaux de cordiérite que les roches de la zone I. Une combinaison de ces analyses quantitatives avec un modèle numérique de nucléation et croissance a été utilisée pour déduire les paramètres de nucléation et croissance contrôlant les différentes textures minérales observées. Pour développer le modèle de nucléation et de croissance, il est nécessaire de connaître le chemin température - temps des échantillons. L'histoire thermique est complexe parce que l'intrusion est produite par plusieurs injections successives. En effet, le mécanisme d'emplace¬ment et la durée de chaque injection peuvent influencer la structure thermique dans l'auréole. Une subdivision des injections en plus petits incréments, appelés puises, permet de concentrer la chaleur dans les bords de l'intrusion. Une mise en place préférentielle de ces puises sur un côté de l'intrusion modifie l'apport thermique et influence la taille de l'auréole de contact produite, auréole qui devient asymétrique. Dans le cas de la première injection de granite, une modélisation détaillée montre que l'épaisseur relative de l'auréole de contact de Torres del Paine au-dessus et en dessous de l'intrusion (150 et 400 m) est mieux expliquée par un emplacement rapide du granite. Néanmoins, les températures calculées dans l'auréole de con¬tact sont trop basses pour que les modèles thermiques soient cohérants par rapport à la taille de cette auréole. Ainsi, un autre mecanisme exothermique est nécessaire pour permettre à la roche encais¬sante de produire les assemblages observés. L'observation des roches encaissantes entourant les granites montre que les minéraux clastiques dans les sédiments immatures au-dehors de l'auréole sont hydratés suite à la petite quantité de fluide expulsée durant le métamorphisme de contact et/ou la mise en place des granites. Les réactions d'hydratation peuvent permettre une augmentation de la température jusqu'à 50 °C. Afin de déterminer l'origine des fluides, une étude isotopique de roches de l'auréole de contact a été entreprise. Les isotopes stables d'oxygène et d'hydrogène sur la roche totale ainsi que la concentration en chlore dans la biotite indiquent que la mise en place des granites du Torres del Paine n'induit qu'une circulation de fluide limitée. Les données d'oxygène sur roche totale montrent des valeurs δ180 entre 9.0 et 10.0%o au sein des cinq premiers mètres du contact. Les valeurs augmentent jusqu'à 13.0 - 15.0 plus on s'éloigne de l'intrusion. Les valeurs 5D sur roche totale montrent une zonation plus complexe. Les valeurs de la roche encaissante (-90 à -70%o) diminuent progressivement d'environ 20%o depuis l'extérieur de l'auréole jusqu'à une distance d'environ 150 m du granite. Cette diminution est suivie par une augmentation d'environ 20%o au sein des 150 mètres les plus proches du contact (-97.0 à -78%o au contact). La diminution initiale des valeurs de 6D est interprétée comme la conséquence du fractionnement de Rayleigh qui accompagne les réactions de déshydratation formant la cordiérite, alors que l'augmentation finale reflète l'infiltration de fluide riche en eau venant de l'intrusion. A partir de ces résultats, le volume du fluide issu du granite ainsi que son effet thermique a pu être estimé. Ces résultats montrent que l'augmentation de température associée à ces fluides est limitée à un maximum de 30 °C. La contribution de ces fluides dans le bilan thermique est donc faible. Ces différents résultats nous ont permis de créer un modèle thermique associé à la for¬mation de l'auréole de contact qui intègre la mise en place rapide du granite et les réactions d'hydratation lors du métamorphisme. L'intégration de ce modèle thermique dans le modèle numérique de croissance minérale nous permet de calculer les textures des cordiérites. Cepen¬dant, ce modèle est dépendant de la vitesse de croissance et de nucléation de ces cordiérites. Nous avons obtenu ces paramètres en comparant les textures prédites par le modèle et les textures observées dans les roches de l'auréole de contact du Torres del Paine. Les paramètres cinétiques extraits du modèle optimisé indiquent une cristallisation rapide de la cordiérite avant le pic thermique dans la partie interne de l'auréole, et une réaction continue après le pic thermique dans la partie la plus externe de l'auréole. Seules de petites dépendances de température des paramètres de cinétique semblent être nécessaires pour expliquer les don¬nées obtenues sur la distribution des tailles de cristaux. Ces résultats apportent un éclairage nouveau sur la cinétique qui contrôle les réactions métamorphiques.

Josephi Scaligeri observationes in quaedam Novi Testamenti loca. - De duplici unius episcopi in eadem dioecesi sede (15). - En tête, copie du testament de Jos. Scaliger.

Bouhier.

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.

Financial Repression in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714

If financial deepening aids economic growth, then financial repression should be harmful. We use a natural experiment – the change in the English usury laws in 1714 – to analyze the effects of interest rate restrictions. We use a sample of individual loan transactions to demonstrate how the reduction of the legal maximum rate of interest affected the supply and demand for credit. Average loan size and minimum loan size increased strongly, and access to credit worsened for those with little ‘social capital.’ While we have no direct evidence that loans were misallocated, the discontinuity in loan receipts makes this highly likely. We conclude that financial repression can undermine the positive effects of financial deepening.