Financial Expertise as an Arms Race

We propose a model in which firms involved in trading securities overinvest in financial expertise. Intermediaries or traders in the model meet and bargain over a financial asset. As in the bargaining model in Dang (2008), counterparties endogenously decide whether to acquire information, and improve their bargaining positions, even though the information creates adverse selection. We add to this setting the concept of "financial expertise" as resources invested to lower the cost of later acquiring information about the value of the asset being traded. These investments are made before the parties know about their role in the bargaining game, as proposer or responder, buyer or seller. A prisoner's dilemma arises because investments to lower information acquisition costs improve bargaining outcomes given the other party's information costs, even though the information has no social benefit. These investments lead to breakdowns in trade, or liquidity crises, in response to random but infrequent increases in asset volatilityFinancial services;over-the-counter markets;financial crisis

Financial Expertise as an Arms Race

We propose a model in which rms involved in trading securities overinvest in financial expertise. Intermediaries or traders in the model meet and bargain over a financial asset. As in the bargaining model in Dang (2008), counterparties endogenously decide whether to acquire information, and improve their bargaining positions, even though the information creates adverse selection. We add to this setting the concept of "financial expertise" as resources invested to lower the cost of later acquiring information about the value of the asset being traded. These investments are made before the parties know about their role in the bargaining game, as proposer or responder, buyer or seller. A prisoner's dilemma arises because investments to lower information acquisition costs improve bargaining outcomes given the other party's information costs, even though the information has no social benefit. These investments lead to breakdowns in trade, or liquidity crises, in response to random but infrequent increases in asset volatility

Financial Expertise as an Arms Race

We propose a model in which rms involved in trading securities overinvest in financial expertise. Intermediaries or traders in the model meet and bargain over a financial asset. As in the bargaining model in Dang (2008), counterparties endogenously decide whether to acquire information, and improve their bargaining positions, even though the information creates adverse selection. We add to this setting the concept of "financial expertise" as resources invested to lower the cost of later acquiring information about the value of the asset being traded. These investments are made before the parties know about their role in the bargaining game, as proposer or responder, buyer or seller. A prisoner's dilemma arises because investments to lower information acquisition costs improve bargaining outcomes given the other party's information costs, even though the information has no social benefit. These investments lead to breakdowns in trade, or liquidity crises, in response to random but infrequent increases in asset volatility

Diagnosis of Kawasaki disease using a minimal whole blood gene expression signature

Importance There is no diagnostic test for Kawasaki disease (KD). Diagnosis is based on clinical features shared with other febrile conditions, frequently resulting in delayed or missed treatment and an increased risk of coronary artery aneurysms. Objective To identify a whole blood gene expression signature that distinguishes children with KD in the first week of illness from other febrile conditions. Design Case-control discovery study groups comprising training, test, and validation groups of children with KD or comparator febrile illness. Setting Hospitals in the UK, Spain, Netherlands and USA. Participants The training and test discovery group comprised 404 children with infectious and inflammatory conditions (78 KD, 84 other inflammatory diseases, 242 bacterial or viral infections) and 55 healthy controls. The independent validation group included 130 febrile children and 102 KD patients, including 72 in the first 7 days of illness. Exposures Whole blood gene expression was evaluated using microarrays, and minimal transcript sets distinguishing KD were identified using a novel variable selection method (Parallel Deterministic Model Search). Main outcomes and measures The ability of transcript signatures - implemented as Disease Risk Scores - to discriminate KD cases from controls, was assessed by Area Under the Curve (AUC), sensitivity, and specificity at the optimal cut-point according to Youden’s index. Results A 13-transcript signature identified in the discovery training set distinguished KD from other infectious and inflammatory conditions in the discovery test set with AUC, sensitivity, and specificity (95% confidence intervals (CI)) of 96.2% (92.5-99.9), 81.7% (60.0-94.8), and 92.1% (84.0-97.0), respectively. In the validation set, the signature distinguished KD from febrile controls with AUC, sensitivity, and specificity (95% CI) of 94.6% (91.3-98.0), 85.9% (76.8-92.6), and 89.1% (83.0-93.7) respectively. The signature was applied to clinically defined categories of Definite, Highly Probable and Possible KD resulting in AUCs of 98.1%, 96.3% and 70.0% respectively, mirroring clinical certainty. Conclusions and relevance A 13-transcript blood gene expression signature distinguished KD from other febrile conditions. Diagnostic accuracy increased with certainty of clinical diagnosis. A test incorporating the 13-transcript Disease Risk Score may enable earlier diagnosis and treatment of KD, and reduce inappropriate treatment in those with other diagnoses

IL-10 administration reduces PGE-2 levels and promotes CR3-mediated clearance of Escherichia coli K1 by phagocytes in meningitis

Ineffectiveness of antibiotics in treating neonatal Escherichia coli K1 meningitis and the emergence of antibiotic-resistant strains evidently warrants new prevention strategies. We observed that administration of interleukin (IL)-10 during high-grade bacteremia clears antibiotic-sensitive and -resistant E. coli from blood of infected mice. Micro-CT studies of brains from infected animals displayed gross morphological changes similar to those observed in infected human neonates. In mice, IL-10, but not antibiotic or anti-TNF antibody treatment prevented brain damage caused by E. coli. IL-10 administration elevated CR3 expression in neutrophils and macrophages of infected mice, whereas infected and untreated mice displayed increased expression of FcγRI and TLR2. Neutrophils or macrophages pretreated with IL-10 ex vivo exhibited a significantly greater microbicidal activity against E. coli compared with cells isolated from wild-type or IL-10−/− mice. The protective effect of IL-10 was abrogated when CR3 was knocked-down in vivo by siRNA. The increased expression of CR3 in phagocytes was caused by inhibition of prostaglandin E-2 (PGE-2) levels, which were significantly increased in neutrophils and macrophages upon E. coli infection. These findings describe a novel modality of IL-10–mediated E. coli clearance by diverting the entry of bacteria via CR3 and preventing PGE-2 formation in neonatal meningitis

Hospitalisation with Infection, Asthma and Allergy in Kawasaki Disease Patients and Their Families: Genealogical Analysis Using Linked Population Data

Background: Kawasaki disease results from an abnormal immunological response to one or more infectious triggers. We hypothesised that heritable differences in immune responses in Kawasaki disease-affected children and their families would result in different epidemiological patterns of other immune-related conditions. We investigated whether hospitalisation for infection and asthma/allergy were different in Kawasaki disease-affected children and their relatives. Methods/Major Findings: We used Western Australian population-linked health data from live births (1970-2006) to compare patterns of hospital admissions in Kawasaki disease cases, age- and sex-matched controls, and their relatives. There were 295 Kawasaki disease cases and 598 age- and sex-matched controls, with 1,636 and 3,780 relatives, respectively. Compared to controls, cases were more likely to have been admitted at least once with an infection (cases, 150 admissions (50.8%) vs controls, 210 admissions (35.1%); odds ratio (OR) = 1.9, 95% confidence interval (CI) 1.4-2.6, P = 7.2×10-6), and with asthma/allergy (cases, 49 admissions (16.6%) vs controls, 42 admissions (7.0%); OR = 2.6, 95% CI 1.7-4.2, P = 1.3×10-5). Cases also had more admissions per person with infection (cases, median 2 admissions, 95% CI 1-5, vs controls, median 1 admission, 95% CI 1-4, P = 1.09×10-5). The risk of admission with infection was higher in the first degree relatives of Kawasaki disease cases compared to those of controls, but the differences were not significant. Conclusion: Differences in the immune phenotype of children who develop Kawasaki disease may influence the severity of other immune-related conditions, with some similar patterns observed in relatives. These data suggest the influence of shared heritable factors in these families

Financial expertise as an arms race

We show that firms intermediating trade have incentives to overinvest in financial expertise. In our model, expertise improves firms’ ability to estimate value when trading a security. Expertise creates asymmetric information, which, under normal circumstances, works to the advantage of the expert as it deters opportunistic bargaining by counterparties. This advantage is neutralized in equilibrium, however, by offsetting investments by competitors. Moreover, when volatility rises the adverse selection created by expertise triggers breakdowns in liquidity, destroying gains to trade and thus the benefits that firms hope to gain through high levels of expertise

Financial expertise as an arms race

We show that firms intermediating trade have incentives to overinvest in financial expertise. In our model, expertise improves firms’ ability to estimate value when trading a security. Expertise creates asymmetric information, which, under normal circumstances, works to the advantage of the expert as it deters opportunistic bargaining by counterparties. This advantage is neutralized in equilibrium, however, by offsetting investments by competitors. Moreover, when volatility rises the adverse selection created by expertise triggers breakdowns in liquidity, destroying gains to trade and thus the benefits that firms hope to gain through high levels of expertise