Liability Insurance under the Negligence Rule

We analyze the efficiency properties of the negligence rule with liability insurance, when the tort-feasor's behavior is imperfectly observable both by the insurer and the court. Efficiency is shown to depend on the extent to which the evidence is informative, on the evidentiary standard for finding negligence, and on whether insurance contracts can condition directly on the same evidence as used by courts to assess behavior. When evidence is not directly contractible, the negligence rule with compensatory damages is generally inefficient and can be improved by decoupling liability from the harm suffered by the victim.Negligence, liability insurance, evidentiary standard, moral hazard, judicial error, decoupling, prudence

Incentives for Partial Acquisitions and Real Market Concentration

We analyze the incentives of a controlling shareholder of a firm to acquire, directly or indirectly through his firm, shares in a competitor. We charaterize the conditions under which these partial acquisitions as well as the equilibrium toehold and its nature: controlling or silent. We find that while this shareholder gains, the acquisition is detrimental to minority shareholders of his firm, or of the target, or even of both. We show that the incentives are enhanced if the dominant shareholder initially holds silent stakes in rivals while controlling interests may discourage them. Moreover, we find that partial acquisitions always lead to a decrease in the joint profit of the two firms involved, and an increase in competitor's profits as the market becomes less competitive.horizontal partial acquisitions ; real market concentration ; dominant shareholder ; minority shareholders ; silent interests.

Real market concentration through partial acquisitions

We study horizontal partial acquisitions in an oligopolistic industry in the absence of synergies. Contrary to existing results, we find that a dominant shareholder may choose to acquire shares in a competitor although the aggregate profit of the group of firms under his control, and even the greater group of firms in which he has a stake, is reduced. This is due to a “favorite” effect: after the acquisition, the dominant shareholder will favor the firm in which he eventually holds the relatively higher share to the detriment of shareholders of the other firms. For this reason, a block of shares can be bought at a discount when the value of the firm of the initiator decreases post acquisition. Moreover, we show that the existence of initial silent toeholds in rivals enhances the incentive for a dominant shareholder to buy shares in other firms in the industry, whereas controlling ones may discourage them.Horizontal partial acquisitions; Real market concentration; Dominant shareholder; Minority shareholders; Silent interests

Liability Insurance under the Negligence Rule

We analyze the efficiency properties of the negligence rule with liability insurance, when the tort-feasor's behavior is imperfectly observable both by the insurer and the court. Efficiency is shown to depend on the extent to which the evidence is informative, on the evidentiary standard for finding negligence, and on whether insurance contracts can condition directly on the same evidence as used by courts to assess behavior. When evidence is not directly contractible, the negligence rule with compensatory damages is generally inefficient and can be improved by decoupling liability from the harm suffered by the victim

The First-Order Approach when the Cost of Effort is Money

We provide sufficient conditions for the first-order approach in the principal-agent problem when the agent’s utility has the non-separable form u(y - c(a)) where y is the contractual payoff and c(a) is the money cost of effort. We first consider a decision-maker facing prospects which cost c(a) with distributions of returns y that depends on a. The decision problem is shown to be concave if the primitive of the cumulative distribution of returns is a convex function, a condition we call Concavity of the Cumulative Quantile (CCQ). Next we apply CCQ to the distribution of outcomes (or their likelihood-ratio transforms) in the principal-agent problem and derive restrictions on the utility function that validate the first-order approach. We also discuss a stronger condition, log-convexity of the distribution, and show that it allows binding limited liability constraints, which CCQ does not

Risk Aversion and Incentives

We consider decision-makers facing a risky wealth prospect. The probability distribution depends on pecuniary effort, e.g., the amount invested in a venture or prevention expenditures to protect against accidental losses. We provide necessary local conditions and sufficient global conditions for greater risk aversion to induce more (or less) investment or to have no effect. We apply our results to incentives in the principal-agent framework when differently risk averse agents face the same monetary incentives

Auditing Policies and Information Systems in Principal-Agent Analysis

Cet article traite des mesures de la performance qui sont induites par les politiques optimales d'audit, dans un modèle principal-agent avec aléa moral. Nous faisons d'abord remarquer que deux mesures A et B sont rarement comparables selon l'étalement (en anglais "mean-preserving spread") de la distribution de leur ratio de vraisemblance respectif. Nous offrons toutefois une généralisation de ce critère usuel, que nous utilisons pour montrer que, si le signe de la troisième dérivée de l'inverse de la fonction d'utilité de l'agent est constant, alors il est possible de comparer A et B parce que l'une des distributions de ratio de vraisemblance qui leur sont associées domine l'autre au sens de la dominance stochastique du troisième ordre. La conséquence pratique de ce résultat est que le design des politiques optimales d'audit nécessite non seulement l'arbitrage bien connu entre incitations et assurance, mais aussi l'examen des risques contingents.This paper considers the information systems induced by auditing policies in a principal-agent model with moral hazard. We point out that two such information systems A and B are seldom comparable using the customary mean-preserving spread relation between their respective likelihood ratio distributions. We offer a general extension of this criterion, however, and we use it to show that, provided the sign of the third derivative of the agent's inverse utility function is constant, it is yet often possible to rank A against B because one of the corresponding likelihood ratio distributions dominates the other in the third order. The upshot is that the design of optimal auditing policies involves not only the well-known tradeoff between risk-sharing and incentives, but also an examination of the location of risk

Specific hydroxylations determine selective corticosteroid recognition by human glucocorticoid and mineralocorticoid receptors

AbstractThe ligand binding domains of the human mineralocorticoid receptor (hMR) and glucocorticoid receptor (hGR) display a high sequence homology. Aldosterone and cortisol, the major mineralocorticoid and glucocorticoid hormones, are very closely related, leading to the cross-binding of these hormones to both receptors. The present study reports on the mechanism by which hMR and hGR are activated preferentially by their cognate hormones. We found that the ability of corticosteroids to stimulate the receptor’s transactivation function is depending on the stability of the steroid-receptor complexes. In the light of a hMR structural model we propose that contacts through the corticosteroid C21 hydroxyl group are sufficient to stabilize hMR but not hGR and that additional contacts through the C11- and C17-hydroxyl groups are required for hGR

Use by small and medium mammals of wildlife crossing structures on two motorways in south-western France. Results of the first two years of camera-trap surveys

Depuis 2012, 9 passages à petite et moyenne faune (8 buses sèches au droit d’ouvrages hydrauliques et une buse sèche en milieu boisé) nouvellement installés sous deux autoroutes du centre-ouest de la France ont été suivis par pièges photographiques sur des périodes variant de 9 à 24 mois selon les sites. Au total 5338 passages concernant 16 espèces de petits, moyens et grands Mammifères (Micromammifères exclus), comptant parmi celles les plus soumises aux collisions routières, ont été détectés. Le nombre moyen de passages par jour et par ouvrage observé de 1,20 ± 0,70 ET est similaire à d’autres suivis menés en Europe de l’Ouest sur des ouvrages semblables. Près de 91 % de ces passages sont attribuables à 5 espèces : le Blaireau Meles meles (45 %), le Renard roux Vulpes vulpes (19 %), le Lapin de garenne Oryctolagus cuniculus (9 %), la Genette commune Genetta genetta (9 %) et la Fouine Martes foina (9 %). Le nombre de jours de suivi et la saison influencent tout deux significativement les nombres de passages journaliers détectés de ces cinq espèces. Une augmentation du nombre de leurs passages d’un facteur 8 est observée sur les deux premières années de l’étude. Les suivis ayant démarré juste après la mise en service des ouvrages, cette augmentation peut s’expliquer au regard du temps nécessaire aux animaux pour trouver les dispositifs de franchissement et les incorporer dans leurs patrons de déplacements via une période d’adaptation et de processus d’apprentissage. Les diminutions significatives des taux de refus observées chez les Blaireau et Renard au cours du suivi corroborent l’hypothèse d’une accoutumance de la faune aux ouvrages. Indépendamment de la durée du suivi, les nombres de passages détectés de Blaireau, Renard, Lapin et Fouine montrent des saisonnalités spécifiques marquées ; celles-ci pouvant coïncider avec le rythme d’activité des espèces au cours de l’année. Ces premiers résultats sont encourageants et incitent à poursuivre le suivi pour mesurer l’efficacité des ouvrages une fois la période d’adaptation de la faune passée. Pour ce faire, le suivi par pièges photographiques devra être couplé d’échantillonnages additionnels pour évaluer les bénéfices individuels et populationnels de ces ouvrages pour la faune sauvageSince 2012, camera-trap surveys have been carried out to study the use by wildlife of 9 newly-constructed underpasses on two motorways in south-western France (8 modified culverts and 1 underpass for small animals). A total of 5338 successful crossings of 16 small, medium and large mammal species were detected over a 9 to 24 month period (the duration varied with each site). The results comprise the majority of roadkill species, but micro-mammals were excluded from the survey. The mean observed daily crossing rate of 1.20 ± 0.70 SD per structure is comparable to other studies carried out in Western Europe at similar sites. Of the detected crossings, 91 % were made by 5 species: Eurasian badger Meles meles (45 %), Red fox Vulpes vulpes (19 %), Common rabbit Oryctolagus cuniculus (9 %), Common genet Genetta genetta (9 %) and Stone marten Martes fouina (9 %). For these abundant species both the duration of the survey (number of days) and the season were shown to have a significant influence on the number of crossing events. Monitoring began shortly after the installation of each crossing structure. Over a 2-year period, an almost eight-fold increase in use was observed as wild fauna found the crossing structures and incorporated them into their movement patterns through adaptation periods and learning processes. Throughout the survey a decrease in refusal rate by Red fox and Badger was observed, supporting the 'habituation' hypothesis. Usage was significantly different throughout the seasons for Badger, Red fox, Rabbit, and Stone marten. Each of these seasonal patterns could be correlated with species activity throughout the year. The initial survey results are encouraging and suggest that continued long-term monitoring is important to assess the effectiveness of crossing structures after the period of adaptation. To this end, our camera-trap surveys must be accompanied by appropriate additional sampling to measure the individual and population benefits for wildlife of these underpasse