Contract Renegotiation in Agency Problems

This paper studies the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can hold up the agent, undermining the agent's investment incentives. We begin by identifying a countervailing effect: Investment by the agent can increase his value for the asset, thus improving his bargaining position in renegotiation. We show that option contracts will achieve the first best whenever this threat-point effect dominates the holdup effect. Otherwise, achieving the first best is difficult and, in many cases, impossible. In such cases, we show that if parties have an appropriate signal available, then the first best is still attainable for a wide class of bargaining procedures. A noisy signal, however, means that the optimal contract will involve terms that courts might view as punitive and so refuse to enforce.

Word predictability blurs the lines between production and comprehension : Evidence from the production effect in memory

Acknowledgements We are grateful to Faith Tan for data collection and speech onset measurements, and to Opal Harshe for data collection. JR was supported by the Dutch Science Foundation (NWO) grant 275-89-032. NWO played no role in the study design, the collection, analysis and interpretation of data, the writing of the report, or in the decision to submit the article for publication.Peer reviewedPostprin

Contract Renegotiation in Agency Problems

This paper studies the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can holdup the agent, undermining the agent's investment incentives. We begin by identifying a countervailing effect: Investment by the agent can increase his value for the asset, thus improving his bargaining position in renegotiation. We show that option contracts will achieve the first best whenever this threat-point effect dominates the holdup effect. Otherwise, achieving the first best is difficult and, in many cases, impossible. In such cases, we show that if parties have an appropriate signal available, then the first best is still attainable for a wide class of bargaining procedures. A noisy signal, however, means that the optimal contract will involve terms that courts might view as punitive and so refuse to enforce.Contract renegotiation, double moral hazard, relationship- specific investment

A coupled finite volume and material point method for two-phase simulation of liquid-sediment and gas-sediment flows

Mixtures of fluids and granular sediments play an important role in many industrial, geotechnical, and aerospace engineering problems, from waste management and transportation (liquid--sediment mixtures) to dust kick-up below helicopter rotors (gas--sediment mixtures). These mixed flows often involve bulk motion of hundreds of billions of individual sediment particles and can contain both highly turbulent regions and static, non-flowing regions. This breadth of phenomena necessitates the use of continuum simulation methods, such as the material point method (MPM), which can accurately capture these large deformations while also tracking the Lagrangian features of the flow (e.g.\ the granular surface, elastic stress, etc.). Recent works using two-phase MPM frameworks to simulate these mixtures have shown substantial promise; however, these approaches are hindered by the numerical limitations of MPM when simulating pure fluids. In addition to the well-known particle ringing instability and difficulty defining inflow/outflow boundary conditions, MPM has a tendency to accumulate quadrature errors as materials deform, increasing the rate of overall error growth as simulations progress. In this work, we present an improved, two-phase continuum simulation framework that uses the finite volume method (FVM) to solve the fluid phase equations of motion and MPM to solve the solid phase equations of motion, substantially reducing the effect of these errors and providing better accuracy and stability for long-duration simulations of these mixtures

Geosynchronous satellite maneuver detection and orbit recovery using ground based optical tracking

Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Aeronautics and Astronautics, 2006.Includes bibliographical references (p. 115-116).Geosynchronous satellite orbit maintenance is a very important issue. Satellites maneuver frequently requiring the ability to detect unknown maneuvers for target satellites and quickly recover an accurate orbit. This study uses angles only ground based optical tracking to detect maneuvers and recover orbits for geosynchronous satellites. Using the Analytical Graphics Inc. Orbit Determination Tool Kit sequential estimation software, a sequential estimation filter was "tuned" and validated in various ways. Then, a parametric study of maneuver size and time required to detect a maneuver was done via simulation. Simulated maneuvers ranging from Av's of 0.01 m/s to 1.0 m/s are discussed. Also examined are multiple methods to recover the orbit after such maneuvers are detected. Orbits are recovered for simulated maneuvers and for a real data case of unknown maneuver size. This work is important towards developing more automatic methods of detecting maneuvers for a large population of active geosynchronous satellites. Specific contributions made by this thesis include the following:(cont.) the process and results of "tuning" of the sequential filter for a geosynchronous satellite using high accuracy ground based optical tracking data, the methods of orbit and covariance validation including an orbit overlap analysis and a statistical method using measurements, a parametric study for maneuver detection, and exploring methods for recovering post maneuver orbits quickly and accurately. With the tuned filter and optical tracking, simulations showed that a Av of 1.0 m/s could be detected as soon as 15 minutes after the maneuver, a Av of 0.1 m/s could be discernible within 6 hours and easily detected by 12 hours, and a Av of 0.01 m/s took from 12 to 24 hours to detect with confidence. The best demonstrated means for post-maneuver orbit recovery utilized a method of estimating the approximate maneuver time using the pre-maneuver filter orbit and an approximate post maneuver orbit followed by the "sprinkling" of a number of maneuvers over that period with Av's of 0 m/s but with finite covariances, and then filtering through that period.by Benjamin S. Aaron.S.M

Design of plate and screw anchors in dense sand:failure mechanism, capacity and deformation

Plate and screw anchors provide a significant uplift capacity and have multiple applications in both onshore and offshore geotechnical engineering. Uplift design methods are mostly based on semi-empirical approaches assuming a failure mechanism, a normal and a shear stress distribution at failure and empirical factors back-calculated against experimental data. However, these design methods are shown to under- or overpredict most of the existing larger scale experimental tests. Numerical FE simulations are undertaken to provide new insight into the failure mechanism and stress distribution which should be considered in anchor design in dense sand. Results show that a conical shallow wedge whose inclination to the vertical direction is equal to the dilation angle is a good approximation of the failure mechanism in sand. This shallow mechanism has been observed in each case for relative embedment ratios (depth/diameter) ranging from 1 to 9. However, the stress distribution varies non-linearly with depth, due to the soil deformability and progressive failure. A sharp peak of normal and shear stress can be identified close to the anchor edge, before a gradual decrease with increasing distance along the shear plane. The peak stress magnitude increases almost linearly with embedment depth at larger relative embedment ratios. Although further research is necessary, these results lay the basis for the development of a new generation of design criteria for determining anchor capacity at the ultimate limiting state

Signal detection with criterion noise: Applications to recognition memory

A tacit but fundamental assumption of the theory of signal detection is that criterion placement is a noise-free process. This article challenges that assumption on theoretical and empirical grounds and presents the noisy decision theory of signal detection (ND-TSD). Generalized equations for the isosen-sitivity function and for measures of discrimination incorporating criterion variability are derived, and the model’s relationship with extant models of decision making in discrimination tasks is examined. An experiment evaluating recognition memory for ensembles of word stimuli revealed that criterion noise is not trivial in magnitude and contributes substantially to variance in the slope of the isosensitivity function. The authors discuss how ND-TSD can help explain a number of current and historical puzzles in recognition memory, including the inconsistent relationship between manipulations of learning and the isosensitivity function’s slope, the lack of invariance of the slope with manipulations of bias or payoffs, the effects of aging on the decision-making process in recognition, and the nature of responding in remember–know decision tasks. ND-TSD poses novel, theoretically meaningful constraints on theories of recognition and decision making more generally, and provides a mechanism for rapprochement between theories of decision making that employ deterministic response rules and those that postulate probabilistic response rules

Impact of traffic, poverty and facility ownership on travel time to emergency care in Nairobi, Kenya

Background: In many low and middle-income countries (LMICs), timely access to emergency healthcare services is limited. In urban settings, traffic can have a significant impact on travel time, leading to life-threatening delays for time-sensitive injuries and medical emergencies. In this study, we examined travel times to hospitals in Nairobi, Kenya, one of the largest and most congested cities in the developing world. Methods: We used a network approach to estimate average minimum travel times to different types of hospitals (e.g. ownership and level of care) in Nairobi under both congested and uncongested traffic conditions. We also examined the correlation between travel time and socioeconomic status. Results: We estimate the average minimum travel time during uncongested traffic conditions to any level 4 health facility (primary hospitals) or above in Nairobi to be 4.5 min (IQR 2.5–6.1). Traffic added an average of 9.0 min (a 200% increase). In uncongested conditions, we estimate an average travel time of 7.9 min (IQR 5.1–10.4) to level 5 facilities (secondary hospitals) and 11.6 min (IQR 8.5–14.2) to Kenyatta National Hospital, the only level 6 facility (tertiary hospital) in the country. Traffic congestion added an average of 13.1 and 16.0 min (166% and 138% increase) to travel times to level 5 and level 6 facilities, respectively. For individuals living below the poverty line, we estimate that preferential use of public or faith-based facilities could increase travel time by as much as 65%. Conclusion: Average travel times to health facilities capable of providing emergency care in Nairobi are quite low, but traffic congestion double or triple estimated travel times. Furthermore, we estimate significant disparities in timely access to care for those individuals living under the poverty line who preferentially seek care in public or faith-based facilities