Overconfidence and Bailouts

Empirical evidence suggests that managerial overconfidence and government guarantees contribute substantially to excessive risk-taking in the banking industry. This paper incorporates managerial overconfidence and limited bank liability into a principal-agent model, where the bank manager unobservably chooses effort and risk. An overconfident manager overestimates the returns to effort and risk. We find that managerial overconfidence necessitates an intervention into banker pay. This is due to the bank's exploitation of the manager's overevaluation of bonuses, which causes excessive risk-taking in equilibrium. Moreover, we show that the optimal bonus tax rises in overconfidence, if risk-shifting incentives are sufficiently large. Finally, the model indicates that overconfident managers are more likely to be found in banks with large government guarantees, low bonus taxes, and lax capital requirements

Bonus Taxes and International Competition for Bank Managers

We analyze the competition in bonus taxation when banks compensate their managers by means of fixed and incentive pay and bankers are internationally mobile. Banks choose bonus payments that induce excessive managerial risk-taking to maximize their private benefits of existing government bailout guarantees. In this setting the international competition in bonus taxes may feature a 'race to the bottom' or a 'race to the top', depending on whether bankers are a source of net positive tax revenue or inflict net fiscal losses on taxpayers as a result of incentive pay. A 'race to the top' becomes more likely when governments' impose only lax capital requirements on banks, whereas a 'race to the bottom' is more likely when bank losses are partly collectivized in a banking union

TFE and Spt4/5 open and close the RNA polymerase clamp during the transcription cycle

Transcription is an intrinsically dynamic process and requires the coordinated interplay of RNA polymerases (RNAPs) with nucleic acids and transcription factors. Classical structural biology techniques have revealed detailed snapshots of a subset of conformational states of the RNAP as they exist in crystals. A detailed view of the conformational space sampled by the RNAP and the molecular mechanisms of the basal transcription factors E (TFE) and Spt4/5 through conformational constraints has remained elusive. We monitored the conformational changes of the flexible clamp of the RNAP by combining a fluorescently labeled recombinant 12-subunit RNAP system with single-molecule FRET measurements. We measured and compared the distances across the DNA binding channel of the archaeal RNAP. Our results show that the transition of the closed to the open initiation complex, which occurs concomitant with DNA melting, is coordinated with an opening of the RNAP clamp that is stimulated by TFE. We show that the clamp in elongation complexes is modulated by the nontemplate strand and by the processivity factor Spt4/5, both of which stimulate transcription processivity. Taken together, our results reveal an intricate network of interactions within transcription complexes between RNAP, transcription factors, and nucleic acids that allosterically modulate the RNAP during the transcription cycle

Characterization of Damping Properties in 3D Printed Structures

Current research on the effectiveness of a subordinate oscillator array (SOA) as a broadband mechanical filter relies on adequate knowledge of the SOAs material properties. Recent studies have shown a high sensitivity of these structures to disorder. A desire to produce large numbers of arrays to test this sensitivity to disorder motivated a transition from metal to 3-dimensional printed plastic SOAs. Irregularities associated with the curing process of the 3D printed polymers, as well as a general inconsistency of material properties of plastics, in turn highlighted the need for characterization of properties of 3D printed materials, especially those properties related to damping. As part of this study, several 3D printed plastic cantilevers, varying in material, printing technique, and printing orientation, are measured. Quantities of interest include the Young’s modulus and density, as well as phenomenological properties, like the quality factor of specific designs. An ASTM standard test method for property determination is implemented with a laser Doppler vibrometer (LDV) to test each polymer. In addition to the ASTM protocol, tests are conducted in vacuum to distinguish internal damping mechanisms of the cantilever from external fluid mechanisms. Results are compared to both analytic and numeric predictions and published theory

Association study of suicidal behavior and affective disorders with a genetic polymorphism in ABCG1, a positional candidate on chromosome 21q22.3

The gene that codes for the ABC transporter ABCG1 is located in a chromosomal susceptibility region (21q22.3) for affective disorders. Genetic variations in ABCG1 have been associated with affective disorders in Japanese males. In this study, we investigated the distribution of a G2457A polymorphism in patients with affective disorders, suicide attempters with various psychiatric diagnoses and healthy subjects, We initially found a trend towards a modest association with affective disorders in males (p = 0.046 for allele frequencies and p = 0.046 for AA versus GG). We conducted a replication study with independent patients and controls, There was no association with affective disorders, either in the replication or in the combined group, Furthermore, we found no association with suicidal behavior, These findings do not support the hypothesis that ABCG1 is a susceptibility gene for affective disorders or suicidal behavior. Copyright (C) 2000 S. Karger AG, Basel