Information Acquisition in Vertical Relations

We analyze a simple supply chain with one supplier, one retailer and uncertainty about market demand. Focusing on the incentives of the supplier and the retailer to enhance their private information about the actual market conditions, we show that choices on information acquisition are strategic complements. While the retailer's incentives are mainly driven by the information rent that he can earn, the supplier will choose to acquire information only if the retailer is rather well informed, even though the information is free of charge

Left gaze bias in humans, rhesus monkeys and domestic dogs

While viewing faces, human adults often demonstrate a natural gaze bias towards the left visual field, that is, the right side of the viewee’s face is often inspected first and for longer periods. Using a preferential looking paradigm, we demonstrate that this bias is neither uniquely human nor limited to primates, and provide evidence to help elucidate its biological function within a broader social cognitive framework. We observed that 6-month-old infants showed a wider tendency for left gaze preference towards objects and faces of different species and orientation, while in adults the bias appears only towards upright human faces. Rhesus monkeys showed a left gaze bias towards upright human and monkey faces, but not towards inverted faces. Domestic dogs, however, only demonstrated a left gaze bias towards human faces, but not towards monkey or dog faces, nor to inanimate object images. Our findings suggest that face- and species-sensitive gaze asymmetry is more widespread in the animal kingdom than previously recognised, is not constrained by attentional or scanning bias, and could be shaped by experience to develop adaptive behavioural significance

Magnetism, FeS colloids, and Origins of Life

A number of features of living systems: reversible interactions and weak bonds underlying motor-dynamics; gel-sol transitions; cellular connected fractal organization; asymmetry in interactions and organization; quantum coherent phenomena; to name some, can have a natural accounting via $physical$ interactions, which we therefore seek to incorporate by expanding the horizons of `chemistry-only' approaches to the origins of life. It is suggested that the magnetic 'face' of the minerals from the inorganic world, recognized to have played a pivotal role in initiating Life, may throw light on some of these issues. A magnetic environment in the form of rocks in the Hadean Ocean could have enabled the accretion and therefore an ordered confinement of super-paramagnetic colloids within a structured phase. A moderate H-field can help magnetic nano-particles to not only overcome thermal fluctuations but also harness them. Such controlled dynamics brings in the possibility of accessing quantum effects, which together with frustrations in magnetic ordering and hysteresis (a natural mechanism for a primitive memory) could throw light on the birth of biological information which, as Abel argues, requires a combination of order and complexity. This scenario gains strength from observations of scale-free framboidal forms of the greigite mineral, with a magnetic basis of assembly. And greigite's metabolic potential plays a key role in the mound scenario of Russell and coworkers-an expansion of which is suggested for including magnetism.Comment: 42 pages, 5 figures, to be published in A.R. Memorial volume, Ed Krishnaswami Alladi, Springer 201

Endogenous Competition Alters the Structure of Optimal Auctions

Potential bidders respond to a seller's choice of auction mechanism for a common-value or affiliated-values asset by endogenous decisions whether to incur an information-acquisition cost (and observe a private estimate), or forgo competing. Privately informed participants decide whether to incur a bid-preparation cost and pay an entry fee, or cease competing. Auction rules and information flows are quite general; participation decisions may be simultaneous or sequential. The resulting revenue identity for any auction mechanism implies that optimal auctions are allocatively efficient; a nontrivial reserve price is revenue-inferior. Optimal auctions are otherwise contentless: any auction that sells without reserve becomes optimal by adjusting any one of the continuous, spanning parameters, e.g., the entry fee. Seller's surplus-extracting tools are now substitutes, not complements. Many econometric studies of auction markets are seen to be flawed in their identification of the number of bidders

Stock Market Returns, Corporate Governance and Capital Market Equilibrium

This paper analyzes why corporate governance matters for stock returns if the stock market prices the underlying managerial agency problem correctly. Our theory assumes that strict corporate governance prevents managers from diverting cash flows, but reduces incentives for managerial effort. In capital market equilibrium, this trade-off has implications for the firm's earnings, stock returns, and managerial ownership, because governance impacts the firm's risk-return structure. In particular, the strictness of corporate governance is negatively related to earnings and positively to β. Various empirical tests with U.S. data using the governance index of Gompers, Ishii, and Metrick (2003) yield results consistent with these predictions