Credit scoring and incentives for loan officers in a principal agend model

We analyze incentives for loan officers in a model with hidden action, limited liability and truth-telling constraints under the assumption that the principal has private information from an automatic scoring system. First we show that the truth-telling problem reduces the bank’s expected profit whenever the loan officer cannot only conceal bad types, but can also falsely report bad types. Second, we investigate whether the bank should reveal her private information to the agent. We show that this depends on the percentage of good loans in the population and on the signal’s informativeness. Though we had to define different regions for different parameters, we concluded that it might often be favorable to not reveal the signal. This contradicts current practice

When should principals acquire verifiable information?

We analyze a principal-agent model in which a principal has two possibilities to improve his knowledge about the quality of an investment project. First, he has access to an informationtechnology that provides a \textit{verifiable}, unbiased signal. Second, he can hire an agent who detects bad projects with some probability depending on his unobservable effort, and who reports his findings opportunistically. We analyze whether the principal should check the signal before or after he offers a contract. The first policy has the advantage that the agent''s effort can be adjusted to the signal, whereas the second policy allows areduction in the agent''s rent. We show that checking the signal afterwards is always superior if the signal is sufficiently uninformative.microeconomics ;

Credit Scoring and Incentives for Loan Officers in a Principal Agent Model

We analyze incentives for loan officers in a model with hidden action, limited liability and truth-telling constraints under the assumption that the principal has private information from an automatic scoring system. First we show that the truth-telling problem reduces the bank’s expected profit whenever the loan officer cannot only conceal bad types, but can also falsely report bad types. Second, we investigate whether the bank should reveal her private information to the agent. We show that this depends on the percentage of good loans in the population and on the signal’s informativeness. Though we had to define different regions for different parameters, we concluded that it might often be favorable to not reveal the signal. This contradicts current practice

Phospholipid abnormalities in children with Barth syndrome

OBJECTIVES: We sought to identify characteristic lipid abnormalities in patients with Barth syndrome (BTHS) and to correlate the lipid profile to phenotype and genotype. BACKGROUND: Barth syndrome typically includes cardiomyopathy, skeletal myopathy, neutropenia, growth retardation, and 3-methylglutaconic aciduria, and it is commonly associated with mutations in the tafazzin (TAZ) gene, whose products are homologous to phospholipid acyltransferases. However, clinical features of BTHS have also been found in patients with normal TAZ gene. METHODS: We analyzed molecular species of phospholipids in left and right ventricle, skeletal muscle, platelets, lymphoblasts, and fibroblasts from 19 children with BTHS (positive TAZ mutation), 6 children with BTHS-like syndromes (wild-type TAZ), 4 children with isolated cardiomyopathy (wild-type TAZ), and various controls. RESULTS: Cardiolipin, the specific lipid found only in mitochondria, was decreased in all tissues from BTHS patients, whereas concentrations of other phospholipids were normal. The molecular composition of cardiolipin was altered in all tissues from BTHS patients. The molecular compositions of phosphatidylcholine and phosphatidylethanolamine were altered in the heart. Cardiolipin abnormalities were only found in children with true BTHS, not in children with BTHS-like disease or with isolated cardiomyopathy. The degree of cardiolipin deficiency was tissue-specific but did not correlate with severity or specific phenotypic expression of BTHS. CONCLUSIONS: Abnormal cardiolipin is a specific diagnostic marker of cardiomyopathies caused by TAZ mutations. These mutations lead to alterations in the fatty acid composition of several phospholipids, supporting the idea that TAZ encodes a human acyltransferas