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.

Minimal invasive extracorporeal circulation should become the standard practice in coronary revascularization surgery†.

We read with great interest the large-scale network meta-analysis by Kowalewski et al. comparing clinical outcomes of patients undergoing coronary artery bypass grafting (CABG) operated on using minimal invasive extracorporeal circulation (MiECC) or off-pump (OPCAB) with those undergoing surgery on conventional cardiopulmonary bypass (CPB) [1]. The authors actually integrated into single study two recently published meta-analysis comparing MiECC and OPCAB with conventional CPB, respectively [2, 3] into a single study. According to the results of this study, MiECC and OPCAB are both strongly associated with improved perioperative outcomes following CABG when compared with CABG performed on conventional CPB. The authors conclude that MiECC may represent an attractive compromise between OPCAB and conventional CPB. After carefully reading the whole manuscript, it becomes evident that the role of MiECC is clearly undervalued. Detailed statistical analysis using the surface under the cumulative ranking probabilities indicated that MiECC represented the safer and more effective intervention regarding all-cause mortality and protection from myocardial infarction, cerebral stroke, postoperative atrial fibrillation and renal dysfunction when compared with OPCAB. Even though no significant statistical differences were demonstrated between MiECC and OPCAB, the superiority of MiECC is obvious by the hierarchy of treatments in the probability analysis, which ranked MiECC as the first treatment followed by OPCAB and conventional CPB. Thus, MiECC does not represent a compromise between OPCAB and conventional CPB, but an attractive dominant technique in CABG surgery. These results are consistent with the largest published meta-analysis by Anastasiadis et al. comparing MiECC versus conventional CPB including a total of 2770 patients. A significant decrease in mortality was observed when MiECC was used, which was also associated with reduced risk of postoperative myocardial infarction and neurological events [4]. Similarly, another recent meta-analysis by Benedetto et al. compared MiECC versus OPCAB and resulted in comparable outcomes between these two surgical techniques [5]. As stated in the text, superiority of MiECC observed in the current network meta-analysis, when compared with OPCAB, could be attributed to the fact that MiECC offers the potential for complete revascularization, whereas OPCAB poses a challenge for unexperienced surgeons; especially when distal marginal branches on the lateral and/or posterior wall of the heart need revascularization. This is reflected by a significantly lower number of distal anastomoses performed in OPCAB when compared with conventional CPB. Therefore, taking into consideration the literature published up to date, including the results of the current article, we advocate that MiECC should be integrated in the clinical practice guidelines as a state-of-the-art technique and become a standard practice for perfusion in coronary revascularization surgery.

Hadronic light-by-light scattering and the muon g−2

The largest uncertainties in the Standard Model calculation of the anomalous magnetic moment of the muon (g − 2)μ come from hadronic contributions. In particular, it can be expected that in a few years the subleading hadronic light-by-light (HLbL) contribution will dominate the theory uncertainty. We present a dispersive description of the HLbL tensor, which is based on unitarity, analyticity, crossing symmetry, and gauge invariance. Such a model-independent Approach opens up an avenue towards a data-driven determination of the HLbL contribution to the (g − 2)μ.

MASP-1 Induced Clotting--The First Model of Prothrombin Activation by MASP-1.

Mannan-binding lectin-associated serine protease-1 (MASP-1), a protein of the complement lectin pathway, resembles thrombin in terms of structural features and substrate specificity. Due to its interplay with several coagulation factors, it has the ability to induce fibrin clot formation independent of the usual coagulation activation pathways. We have recently shown that MASP-1 activates prothrombin and identified arginine (R) 155, R271, and R393 as potential cleavage sites. FXa cleaves R320 instead of R393, and thrombin cleaves R155 and R284 in prothrombin. Here we have used three arginine-to-glutamine mutants of prothrombin, R271Q, R320Q, R393Q and the serine-to-alanine active site mutant S525A to investigate in detail the mechanism of MASP-1 mediated prothrombin activation. Prothrombin wildtype and mutants were digested with MASP-1 and the cleavage products were analysed by SDS-PAGE and N-terminal sequencing. A functional clotting assay was performed by thrombelastography. We have found that MASP-1 activates prothrombin via two simultaneous pathways, either cleaving at R271 or R393 first. Both pathways result in the formation of several active alternative thrombin species. Functional studies confirmed that both R393 and R320 are required for prothrombin activation by MASP-1, whereas R155 is not considered to be an important cleavage site in this process. In conclusion, we have described for the first time a detailed model of prothrombin activation by MASP-1.

The Hydrogen Atom: The Bohr Model in Detail

The Bohr Model for the Hydrogen Atom's electron is discussed in detail, with a recapitulation of angular momentum and a detailed discussion of relevant units (out of the cgs system).

Physician's adherence to the standard protocol for diabetes treatment in Brooke Army Medical Center (BAMC)

The level of compliance with clinical practice guidelines for patients with Type II Diabetes Mellitus was evaluated in 157 patients treated at BAMC from 1 January 2006 to 1 January 2007. This retrospective analysis was conducted reviewing data from medical records and following the VA/DOD protocols that health care providers are expected to follow at this facility. Data collected included patient’s age and gender, presence or absence of complications of diabetes, physical examination findings, glycemic and lipid control, eye care, foot care, kidney function, and self-management and education. Subjects were selected performing systematic random sampling, and included both male and female patients, from a variety of ages and ethnic groups. The Diabetes complications screened for included glycemic and lipid complications, retinopathy, cardiovascular complications, peripheral circulation complications, and nephropathy. The results revealed that 19.10% had no complications and that the most common complications were: cardiovascular (49.68%), glycemic and lipid control (10.82%), retinopathy and peripheral circulation (8.28% each), and nephropathy (2.54%). Only 2.54% of the records reviewed did not include information on complications. Strictly following the Department of Defense guidelines, six treatment modules were evaluated independently and together to get a final percentage of adherence to the clinical practice guidelines. It was established that the level of adherence was going to be graded as follows: Extremely deficient: 0-15%; very poor: 16-30%; Poor and in need of improvement: 31-45%. Acceptable: 46-60%; Good: 61-80%, and Excellent: 81-100%. The results indicated that the percentage of physicians' adherence to each protocol was as follows: 88.31%, 89.93%, 90.63%, 89.42%, 89.42% and 89.64%. When the results were pooled, the level of adherence to the clinical practice guidelines was 89.55%, proving my hypothesis that Brooke Army Medical Center physicians have excellent adherence to the standard protocols for Diabetes Type II to treat their patients. ^

Assessing residents' readiness to screen for domestic violence: Utilizing the transtheoretical model - stages of change, decisional balance and self-efficacy

Domestic violence is a major public health problem, yet most physicians do not effectively identify patients at risk. Medical students and residents are not routinely educated on this topic and little is known about the factors that influence their decisions to include screening for domestic violence in their subsequent practice. In order to assess the readiness of primary care residents to screen all patients for domestic violence, this study utilized a survey incorporating constructs from the Transtheoretical Model, including Stages of Change, Decisional Balance (Pros and Cons) and Self-Efficacy. The survey was distributed to residents at the University of Texas Health Science Center Medical School in Houston in: Internal Medicine, Medicine/Pediatrics, Pediatrics, Family Medicine, and Obstetrics and Gynecology. Data from the survey was analyzed to test the hypothesis that residents in the earlier Stages of Change report more costs and fewer benefits with regards to screening for domestic violence, and that those in the later stages exhibit higher Self-Efficacy scores. The findings from this study were consistent with the model in that benefits to screening (Pros) and Self-Efficacy were correlated with later Stages of Change, however reporting fewer costs (Cons) was not. Very few residents were ready to screen all of their patients.^

Comparison of compliance and immune response of drug users on the standard and accelerated hepatitis B vaccine schedules - Houston, Texas

Despite the availability of hepatitis B vaccine for over two decades, drug users and other high-risk adult populations have experienced low vaccine coverage. Poor compliance has limited efforts to reduce transmission of hepatitis B infection in this population. Evidence suggests that immunological response in drug users is impaired compared to the general population, both in terms of lower seroprotection rates and antibodies levels.^ The current study investigated the effectiveness of the multi-dose hepatitis B vaccine and compared the effect of the standard and accelerated vaccine schedules in a not-in-treatment, drug-using adult population in the city of Houston, USA.^ A population of drug-users from two communities in Houston, susceptible to hepatitis B, was sampled by outreach workers and referral methodology. Subjects were randomized either to the standard hepatitis vaccine schedule (0, 1-, 6-month) or to an accelerated schedule (0, 1-, 2-month). Antibody levels were detected through laboratory analyses at various time-points. The participants were followed for two years and seroconversion rates were calculated to determine immune response.^ A four percent difference in the overall compliance rate was observed between the standard (73%) and accelerated schedules (77%). Logistic regression analyses showed that drug users living on the streets were twice as likely to not complete all three vaccine doses (p=0.028), and current speedball use was also associated with non-completion (p=0.002). Completion of all three vaccinations in the multivariate analysis was also correlated with older age. Drug users on the accelerated schedule were 26% more likely to achieve completion, although this factor was marginally significant (p=0.085).^ Cumulative adequate protective response was gained by 65% of the HBV susceptible subgroup by 12-months and was identical for both the standard and accelerated schedules. Excess protective response (>=100 mIU/mL) occurred with greater frequency at the later period for the standard schedule (36% at 12-months compared to 14% at six months), while the greater proportion of excess protective response for the accelerated schedule occurred earlier (34% at 6 months compared to 18% at 12-months). Seroconversion at the adequate protective response level of 10 mIU/mL was reached by the accelerated schedule group at a quicker rate (62% vs. 49%), and with a higher mean titer (104.8 vs. 64.3 mIU/mL), when measured at six months. Multivariate analyses indicated a 63% increased risk of non-response for older age and confirmed the existence of an accelerating decline in immune response to vaccination manifesting after 40 years (p=0.001). Injecting more than daily was also highly associated with the risk of non-response (p=0.016).^ The substantial increase in the seroprotection rate at six months may be worth the trade-off against the faster antibody titer decrease and is recommended for enhancing compliance and seroconversion. Utilization of the accelerated schedule with the primary objective of increasing compliance and seroconversion rates during the six months after the first dose may confer early protective immunity and reduce the HBV vulnerability of drug users who continue, or have recently initiated, increased high risk drug use and sexual behaviors.^

A simulation study of the standard design, the rolling six design, the CRM, and the modified CRM in Phase I clinical trials

The Phase I clinical trial is considered the "first in human" study in medical research to examine the toxicity of a new agent. It determines the maximum tolerable dose (MTD) of a new agent, i.e., the highest dose in which toxicity is still acceptable. Several phase I clinical trial designs have been proposed in the past 30 years. The well known standard method, so called the 3+3 design, is widely accepted by clinicians since it is the easiest to implement and it does not need a statistical calculation. Continual reassessment method (CRM), a design uses Bayesian method, has been rising in popularity in the last two decades. Several variants of the CRM design have also been suggested in numerous statistical literatures. Rolling six is a new method introduced in pediatric oncology in 2008, which claims to shorten the trial duration as compared to the 3+3 design. The goal of the present research was to simulate clinical trials and compare these phase I clinical trial designs. Patient population was created by discrete event simulation (DES) method. The characteristics of the patients were generated by several distributions with the parameters derived from a historical phase I clinical trial data review. Patients were then selected and enrolled in clinical trials, each of which uses the 3+3 design, the rolling six, or the CRM design. Five scenarios of dose-toxicity relationship were used to compare the performance of the phase I clinical trial designs. One thousand trials were simulated per phase I clinical trial design per dose-toxicity scenario. The results showed the rolling six design was not superior to the 3+3 design in terms of trial duration. The time to trial completion was comparable between the rolling six and the 3+3 design. However, they both shorten the duration as compared to the two CRM designs. Both CRMs were superior to the 3+3 design and the rolling six in accuracy of MTD estimation. The 3+3 design and rolling six tended to assign more patients to undesired lower dose levels. The toxicities were slightly greater in the CRMs.^

Behavioral decision making and the levels of change: An application of the transtheoretical model to prenatal smoking in low -income women

Despite continued research and public health efforts to reduce smoking during pregnancy, prenatal cessation rates in the United States have decreased and the incidence of low birth weight has increased from 1985 to 1991. Lower socioeconomic status women who are at increased risk for poor pregnancy outcomes may be resistant to current intervention efforts during pregnancy. The purpose of this dissertation was to investigate the determinants of continued smoking and quitting among low-income pregnant women.^ Using data from cross-sectional surveys of 323 low-income pregnant smokers, the first study developed and tested measures of the pros and cons of smoking during pregnancy. The original decisional balance measure for smoking was compared with a new measure that added items thought to be more salient to the target population. Confirmatory factor analysis using structural equation modeling showed neither the original nor new measure fit the data adequately. Using behavioral science theory, content from interviews with the population, and statistical evidence, two 7-item scales representing the pros and cons were developed from a portion (n = 215) of the sample and successfully cross-validated on the remainder of the sample (n = 108). Logistic regression found only pros were significantly associated with continued smoking. In a discriminant function analysis, stage of change was significantly associated with pros and cons of smoking.^ The second study examined the structural relationships between psychosocial constructs representing some of the levels of and the pros and cons of smoking. The cross-sectional design mandates that statements made regarding prediction do not prove causation or directionality from the data or methods analysis. Structural equation modeling found the following: more stressors and family criticism were significantly more predictive of negative affect than social support; a bi-directional relationship was found between negative affect and current nicotine addiction; and negative affect, addiction, stressors, and family criticism were significant predictors of pros of smoking.^ The findings imply reversing the trend of decreasing smoking cessation during pregnancy may require supplementing current interventions for this population of pregnant smokers with programs addressing nicotine addiction, negative affect, and other psychosocial factors such as family functioning and stressors. ^

Proposal for the inclusion of misoprostol in the WHO model list of essential medicines

Gynuity