Group items tagged

Signaling Michael Spence originally proposed the idea of signaling. He proposed that in a situation with information asymmetry, it is possible for people to signal their type, thus believably transferring information to the other party and resolving the asymmetry.

This idea was originally studied in the context of looking for a job. An employer is interested in hiring a new employee who is "skilled in learning." Of course, all prospective employees will claim to be "skilled at learning", but only they know if they really are. This is an information asymmetry. Skill in learning is malleable, and depends upon many factors, including diet, exercise and money. Spence proposes, for example, that going to college can function as a credible signal of an ability to learn. Assuming that people who are skilled in learning can finish college more easily than people who are unskilled, then by finishing college the skilled people signal their skill to prospective employers. No matter how much or how little they may have learned in college, finishing functions as a signal of their capacity for learning. However, finishing college may merely function as a signal of their ability to pay for college, it may signal the willingness of individuals to adhere to orthodox views, or it may signal a willingness to comply with authority.

Screening Joseph E. Stiglitz pioneered the theory of screening. In this way the underinformed party can induce the other party to reveal their information. They can provide a menu of choices in such a way that the choice depends on the private information of the other party. Examples of situations where the seller usually has better information than the buyer are numerous but include used-car salespeople, mortgage brokers and loan originators, stockbrokers and real estate agents.

Examples of situations where the buyer usually has better information than the seller include estate sales as specified in a last will and testament, life insurance, or sales of old art pieces without prior professional assessment of their value.

Because of information asymmetry, unscrupulous sellers can "spoof" items (like replica goods such as watches) and defraud the buyer. As a result, many people not willing to risk getting ripped off will avoid certain types of purchases, or will not spend as much for a given item. It is even possible for the market to decay to the point of nonexistence.

2) Play to your cognitive strengths while wired. Caffeine may increase the speed with which you work, may decrease attentional lapses, and may even benefit recall – but is less likely to benefit more complex cognitive functions, and may even hurt others. Plan accordingly (and preferably prior to consuming caffeine!)

Recall from memory may be improved by caffeine (here and here), possibly due to enhancements in memory encoding rather than retrieval per se. Another study shows caffeine can actually impair estimates of “memory scanning” speed (in the Sternberg paradigm), so the failure of many studies to find recall-related effects of caffeine may reflect a speed-accuracy tradeoff at the time of retrieval.

3) Play to caffeine’s strengths. Caffeine’s effects can be maximized or minimized depending on what else is in your system at the time. The beneficial effects of caffeine may be most pronounced in conjunction with sugar. For example, one factor analytic study has shown caffeine-glucose cocktails provide benefits to cognition not seen with either alone.

Withdrawal symptoms can onset within 12 to 24 hours of caffeine consumption and last between 2 and 9 days.

some studies show grapefruit juice might keep caffeine levels in the bloodstream high for longer, though others have found no such effect

Similarly, nicotine may speed the metabolism of caffeine.

4) Know when to stop – and when to start again. Although you may not grow strongly tolerant to caffeine, you can become dependent on it and suffer withdrawal symptoms. Balance these concerns with the cognitive and health benefits associated with caffeine consumption – and appropriately timed resumption.

Long-term ingestion of large quantities of caffeine (by way of coffee) is associated with a variety of health benefits – not only cognitive enhancements but also reduction in risk for type 2 diabetes (c.f.), Alzheimer’s and Parkinson’s . These beneficial effects may be related to the neuroprotective role of adenosine.

Caffeine’s effects might be masked by green tea extract, Kava Kava or St. John’s Wort – all of which contain theanine and are associated with subjective feelings of relaxation – but other preliminary evidence indicates the opposite effect: theanine might actually potentiate the benefits of caffeine on some tasks (reported in longer format here).

In addition, there are well-established cognitive effects where recall is best when it matches the context of encoding – so if you’re caffeinated when you study for the test, you better be caffeinated when you take it.

5) Finding good sources of caffeine Despite the huge variety of sources of caffeine – including caffeinated soap, candy, and of course chocolate – the optimal use of caffeine is likely to involve small, hourly doses along with some cardioprotective agent. Given the high solubility of caffeine, absorption time should not be an issue (but if for some reason it is, try gum). Otherwise, why not enjoy a cup of green tea (coffee-flavored, if you must), as the Chinese have for nearly 5000 years? It’s hard to come by a better longitudinal study than that.