A comment on the Nash program and the theory of implementation

The mechanisms in the Nash program for cooperative games are madecompatible with the framework of the theory of implementation. This is donethrough a reinterpretation of the characteristic function that avoids feasibilityproblems, thereby allowing an analysis that focuses exclusively on the payoff space. In this framework, we show that the core is the only majorcooperative solution that is Maskin monotonic. Thus, implementation of mostcooperative solutions must rely on refinements of the Nash equilibrium concept(like most papers in the Nash program do). Finally, the mechanisms in theNash program are adapted into the model.

Formation of the long range Dpp morphogen gradient.

The TGF-β homolog Decapentaplegic (Dpp) acts as a secreted morphogen in the Drosophila wing disc, and spreads through the target tissue in order to form a long range concentration gradient. Despite extensive studies, the mechanism by which the Dpp gradient is formed remains controversial. Two opposing mechanisms have been proposed: receptor-mediated transcytosis (RMT) and restricted extracellular diffusion (RED). In these scenarios the receptor for Dpp plays different roles. In the RMT model it is essential for endocytosis, re-secretion, and thus transport of Dpp, whereas in the RED model it merely modulates Dpp distribution by binding it at the cell surface for internalization and subsequent degradation. Here we analyzed the effect of receptor mutant clones on the Dpp profile in quantitative mathematical models representing transport by either RMT or RED. We then, using novel genetic tools, experimentally monitored the actual Dpp gradient in wing discs containing receptor gain-of-function and loss-of-function clones. Gain-of-function clones reveal that Dpp binds in vivo strongly to the type I receptor Thick veins, but not to the type II receptor Punt. Importantly, results with the loss-of-function clones then refute the RMT model for Dpp gradient formation, while supporting the RED model in which the majority of Dpp is not bound to Thick veins. Together our results show that receptor-mediated transcytosis cannot account for Dpp gradient formation, and support restricted extracellular diffusion as the main mechanism for Dpp dispersal. The properties of this mechanism, in which only a minority of Dpp is receptor-bound, may facilitate long-range distribution.

Impact of biocontrol strain Pseudomonas fluorescens CHA0 on rhizosphere bacteria isolated from barley (Hordeum vulgare L.) with special reference to Cytophaga-like bacteria.

AIMS: To assess the impact of the biocontrol strain Pseudomonas fluorescens CHA0 on a collection of barley rhizosphere bacteria using an agar plate inhibition assay and a plant microcosm, focusing on a CHA0-sensitive member of the Cytophaga-like bacteria (CLB). METHODS AND RESULTS: The effect of strain CHA0 on a collection of barley rhizosphere bacteria, in particular CLB and fluorescent pseudomonads sampled during a growth season, was assessed by a growth inhibition assay. On average, 85% of the bacteria were sensitive in the May sample, while the effect was reduced to around 68% in the July and August samples. In the May sample, around 95% of the CLB and around 45% of the fluorescent pseudomonads were sensitive to strain CHA0. The proportion of CHA0-sensitive CLB and fluorescent pseudomonad isolates decreased during the plant growth season, i.e. in the July and August samples. A particularly sensitive CLB isolate, CLB23, was selected, exposed to strain CHA0 (wild type) and its genetically modified derivatives in the rhizosphere of barley grown in gnotobiotic soil microcosms. Two dry-stress periods were imposed during the experiment. Derivatives of strain CHA0 included antibiotic or exopolysaccharide (EPS) overproducing strains and a dry-stress-sensitive mutant. Despite their inhibitory activity against CLB23 in vitro, neither wild-type strain CHA0, nor any of its derivatives, had a major effect on culturable and total cell numbers of CLB23 during the 23-day microcosm experiment. Populations of all inoculants declined during the two dry-stress periods, with soil water contents below 5% and plants reaching the wilting point, but they recovered after re-wetting the soil. Survival of the dry-stress-sensitive mutant of CHA0 was most affected by the dry periods; however, this did not result in an increased population density of CLB23. CONCLUSIONS: CLB comprise a large fraction of barley rhizosphere bacteria that are sensitive to the biocontrol pseudomonad CHA0 in vitro. However, in plant microcosm experiments with varying soil humidity conditions, CHA0 or its derivatives had no major impact on the survival of the highly sensitive CLB strain, CLB23, during two dry-stress periods and a re-wetting period; all co-existed well in the rhizosphere of barley plants. SIGNIFICANCE AND IMPACT OF THE STUDY: Results indicate a lack of interaction between the biocontrol pseudomonad CHA0 and a sensitive CLB when the complexity increases from agar plate assays to plant microcosm experiments. This suggests the occurrence of low levels of antibiotic production and/or that the two bacterial genera occupy different niches in the rhizosphere.

Business cycle measurement with some theory

A method to evaluate cyclical models not requiring knowledge of the DGP and the exact specificationof the aggregate decision rules is proposed. We derive robust restrictions in a class of models; use someto identify structural shocks in the data and others to evaluate the class or contrast sub-models. Theapproach has good properties, even in small samples, and when the class of models is misspecified. Themethod is used to sort out the relevance of a certain friction (the presence of rule-of-thumb consumers)in a standard class of models.

Bringing game theory to hypothesis testing: Establishing finite sample bounds on inference

Small sample properties are of fundamental interest when only limited data is avail-able. Exact inference is limited by constraints imposed by speci.c nonrandomizedtests and of course also by lack of more data. These e¤ects can be separated as we propose to evaluate a test by comparing its type II error to the minimal type II error among all tests for the given sample. Game theory is used to establish this minimal type II error, the associated randomized test is characterized as part of a Nash equilibrium of a .ctitious game against nature.We use this method to investigate sequential tests for the di¤erence between twomeans when outcomes are constrained to belong to a given bounded set. Tests ofinequality and of noninferiority are included. We .nd that inference in terms oftype II error based on a balanced sample cannot be improved by sequential sampling or even by observing counter factual evidence providing there is a reasonable gap between the hypotheses.

The optimum quantity of money: Theory and evidence

In this paper we propose a simple and general model for computing the Ramsey optimal inflation tax, which includes several models from the previous literature as special cases. We show that it cannot be claimed that the Friedman rule is always optimal (or always non--optimal) on theoretical grounds. The Friedman rule is optimal or not, depending on conditions related to the shape of various relevant functions. One contribution of this paper is to relate these conditions to {\it measurable} variables such as the interest rate or the consumption elasticity of money demand. We find that it tends to be optimal to tax money when there are economies of scale in the demand for money (the scale elasticity is smaller than one) and/or when money is required for the payment of consumption or wage taxes. We find that it tends to be optimal to tax money more heavily when the interest elasticity of money demand is small. We present empirical evidence on the parameters that determine the optimal inflation tax. Calibrating the model to a variety of empirical studies yields a optimal nominal interest rate of less than 1\%/year, although that finding is sensitive to the calibration.

Relative price riddles in international business cycle theory: Are transport costs the explanation?

We study relative price behavior in an international business cyclemodel with specialization in production, in which a goods marketfriction is introduced through transport costs. The transporttechnology allows for flexible transport costs. We analyze whetherthis extension can account for the striking differences betweentheory and data as far as the moments of terms of trade and realexchange rates are concerned. We find that transport costs increaseboth the volatility of the terms of trade and the volatility of thereal exchange rate. However, unless the transport technology isspecified by a Leontief technology, transport costs do not resolvethe quantitative discrepancies between theory and data. Asurprising result is that transport costs may actually lower thepersistence of the real exchange rate, a finding that is in contrastto much of the emphasis of the empirical literature.

Social security in theory and practice (II): Efficiency theories, narrative theories and implications for reform

166 countries have some kind of public old age pension. What economic forcescreate and sustain old age Social Security as a public program? Mulligan and Sala-i-Martin (1999b) document several of the internationally and historically common features of social security programs, and explore "political" theories of Social Security. This paper discusses the "efficiency theories", which view creation of the SS program as a full of partial solution to some market failure. Efficiency explanations of social security include the "SS as welfare for the elderly" the "retirement increases productivity to optimally manage human capital externalities", "optimal retirement insurance", the "prodigal father problem", the "misguided Keynesian", the "optimal longevity insurance", the "governmenteconomizing transaction costs", and the "return on human capital investment". We also analyze four "narrative" theories of social security: the "chain letter theory", the "lump of labor theory", the "monopoly capitalism theory", and the "Sub-but-Nearly-Optimal policy response to private pensions theory".The political and efficiency explanations are compared with the international and historical facts and used to derive implications for replacing the typical pay-as-you-go system with a forced savings plan. Most of the explanations suggest that forced savings does not increase welfare, and may decrease it.

Credit cycles in theory and experiment

We test in the laboratory the potential of evolutionary dynamics as predictor of actual behavior. To this end, we propose an asymmetricgame -which we interpret as a borrowerlender relation-, study itsevolutionary dynamics in a random matching set-up, and tests itspredictions. The model provides conditions for the existence ofcredit markets and credit cycles. The theoretical predictions seemto be good approximations of the experimental results.

Horizontal innovation in the theory of growth and development

We analyze recent contributions to growth theory based on the model of expanding variety of Romer (1990). In the first part, we present different versions of the benchmark linear model with imperfect competition. These include the labequipment model, labor-for-intermediates and directed technical change . We review applications of the expanding variety framework to the analysis of international technology diffusion, trade, cross-country productivity differences, financial development and fluctuations. In many such applications, a key role is played by complementarities in the process of innovation.

Doublecortin-positive cells in the adult primate cerebral cortex and possible role in brain plasticity and development.

We have demonstrated that cortical cell autografts might be a useful therapy in two monkey models of neurological disease: motor cortex lesion and Parkinson's disease. However, the origin of the useful transplanted cells obtained from cortical biopsies is not clear. In this report we describe the expression of doublecortin (DCX) in these cells based on reverse-transcription polymerase chain reaction (RT-PCR) and immunodetection in the adult primate cortex and cell cultures. The results showed that DCX-positive cells were present in the whole primate cerebral cortex and also expressed glial and/or neuronal markers such as glial fibrillary protein (GFAP) or neuronal nuclei (NeuN). We also demonstrated that only DCX/GFAP positive cells were able to proliferate and originate progenitor cells in vitro. We hypothesize that these DCX-positive cells in vivo have a role in cortical plasticity and brain reaction to injury. Moreover, in vitro these DCX-positive cells have the potential to reacquire progenitor characteristics that confirm their potential for brain repair.

Contracting externalities and multiple equilibria in sectors: Theory and evidence

We consider an economy where the production technology has constantreturns to scale but where in the descentralized equilibrium thereare aggregate increasing returns to scale. The result follows froma positive contracting externality among firms. If a firms issurrounded by more firms, employees have more opportunitiesoutside their own firm. This improves employees' incentives toinvest in the presence of ex post renegotiation at the firm level,at not cost. Our leading result is that if a region is sparselypopulated or if the degree of development in the region is lowenough, there are multiple equilibria in the level of sectorialemployment. From the theoretical model we derive a non-linearfirst-order censored difference equation for sectoral employment.Our results are strongly consistent with the multiple equilibriahypothesis and the existence of a sectoral critical scale (belowwich the sector follows a delocation process). The scale of theregions' population and the degree of development reduce thecritical scale of the sector.

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.