and the Hoover Institution Partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie. But in organizations of any significant size, the free-rider effects would seem to choke off any motivational forces. This analysis explores how peer pressure operates and how factors such as profit sharing, shame, guilt, norms, mutual monitoring, and empathy interact to create incentives in the firm. The argument that Japanese firms enjoy team spirit because compensation is linked to overall profitability is analyzed. An explanation for the prevalence of partnerships among individuals in similar occupations is provided. Many firms that use profit-sharing plans claim that such plans have beneficial incentive effects. Partnerships, which share profits, not necessarily equally among partners, are thought by their owners to have some incentive features that are lacking in an employer/employee relationship. Indeed, the idea has even made its way down Madison Avenue into television advertising. Witness, for example, the recent ads for Avis Corporation that boast that the employees are owners and therefore will work harder to serve the customer. But the idea that joint ownership can do much for incentives when the number of workers is large seems wrong on the face of it. After all, each worker We thank Eugene Fama, Peter Mueser, Kevin J. Murphy, and Sherwin Rosen for helpful comments. Financial support was provided by the National Science Foundation.

The serine/threonine kinase Akt/PKB is a major downstream effector of growth factor-mediated cell survival. Activated Akt, like Bcl-2 and Bcl-xL, prevents closure of a PT pore component, the voltage-dependent anion channel (VDAC); intracellular acidification; mitochondrial hyperpolarization; and the decline in oxidative phosphorylation that precedes cytochrome c release. However, unlike Bcl-2 and Bcl-xL, the ability of activated Akt to preserve mitochondrial integrity, and thereby inhibit apoptosis, requires glucose availability and is coupled to its metabolism. Hexokinases are known to bind to VDAC and directly couple intramitochondrial ATP synthesis to glucose metabolism. We provide evidence that such coupling serves as a downstream effector function for Akt. First, Akt increases mitochondria-associated hexokinase activity. Second, the antiapoptotic activity of Akt requires only the first committed step of glucose metabolism catalyzed by hexokinase. Finally, ectopic hexokinase expression mimics the ability of Akt to inhibit cytochrome c release and apoptosis. We therefore propose that Akt increases coupling of glucose metabolism to oxidative phosphorylation and regulates PT pore opening via the promotion of hexokinase-VDAC interaction at the outer mitochondrial membrane. Extrinsic signals emanating from cell-surface growth factor and cytokine receptors are major determinants of mammalian cell survival. The transduction of these signals oppose both basal intrinsic proapoptotic activity, as well as external proapoptotic stimuli (Raff 1992;Raff et al. 1993). Analysis of downstream signaling pathways has shown that activation of the PI-3 kinase/Akt(PKB) pathway plays a major role in cell survival induced by cell surface receptors. Following the initial demonstration that activation of the serine/threonine kinase Akt promotes cell survival (Dudek et al. 1997; KauffmannZeh et al. 1997;Kennedy et al. 1997), mounting reports established Akt as a major determinant of cell survival. Akt has been reported to mediate cell survival by various growth factors and cytokines in a variety of cell types and blocks apoptosis induced by multiple apoptotic stimuli (for review, see Datta et al. 1999;Kandel and Hay 1999). Various specific targets of Akt have been proposed to mediate the antiapoptotic activity of Akt (for review, see Datta et al. 1999;Kandel and Hay 1999). However, because growth factors promote cell survival via maintenance of the metabolic function of mitochondria , it is likely that Akt exerts its effect through similar mechanisms, which may be more fundamental and generally conserved.In mammalian cells, apoptosis has been described as a multistep process that can be initiated by a variety of stimuli. Mitochondria play a major role in this process through the release of cytochrome c and other proapoptotic proteins that normally reside in the intermembrane space between the inner and outer mitochondrial membranes (for review, see Gross et al. 1999;Desagher and Martinou 2000). Cytochrome c release is considered an ea...

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Growth factors signaling through the phosphoinositide 3-kinase/Akt pathway promote cell survival. The mechanism by which the serine/threonine kinase Akt prevents cell death remains unclear. We have previously shown that Akt inhibits the activity of DEVD-targeted caspases without changing the steady-state levels of Bcl-2 and Bcl-x L . Here we show that Akt inhibits apoptosis and the processing of procaspases to their active forms by delaying mitochondrial changes in a caspase-independent manner. Akt activation is sufficient to inhibit the release of cytochrome c from mitochondria and the alterations in the inner mitochondrial membrane potential. However, Akt cannot inhibit apoptosis induced by microinjection of cytochrome c. We also demonstrated that Akt inhibits apoptosis and cytochrome c release induced by several proapoptotic Bcl-2 family members. Taken together, our results show that Akt promotes cell survival by intervening in the apoptosis cascade before cytochrome c release and caspase activation via a mechanism that is distinct from Bad phosphorylation.

Limit Order Book as a Market for LiquidityWe develop a dynamic model of an order-driven market populated by discretionary liquidity traders. These traders differ by their impatience and seek to minimize their trading costs by optimally choosing between market and limit orders. We characterize the equilibrium order placement strategies and the waiting times for limit orders. In equilibrium less patient traders are likely to demand liquidity, more patient traders are more likely to provide it. We find that the resiliency of the limit order book increases with the proportion of patient traders and decreases with the order arrival rate. Furthermore, the spread is negatively related to the proportion of patient traders and the order arrival rate. We show that these findings yield testable predictions on the relation between the trading intensity and the spread. Moreover, the model generates predictions for time-series and cross-sectional variation in the optimal order-submission strategies.Finally, we find that imposing a minimum price variation improves the resiliency of a limit order market. For this reason, reducing the minimum price variation does not necessarily reduce the average spread in limit order markets.

The heat-shock transcription factor 1 (HSF1) has an important role in the heat-shock response in vertebrates by inducing the expression of heat-shock proteins (HSPs) and other cytoprotective proteins. HSF1 is present in unstressed cells in an inactive monomeric form and becomes activated by heat and other stress stimuli. HSF1 activation involves trimerization and acquisition of a site-specific DNA-binding activity, which is negatively regulated by interaction with certain HSPs. Here we show that HSF1 activation by heat shock is an active process that is mediated by a ribonucleoprotein complex containing translation elongation factor eEF1A and a previously unknown non-coding RNA that we term HSR1 (heat shock RNA-1). HSR1 is constitutively expressed in human and rodent cells and its homologues are functionally interchangeable. Both HSR1 and eEF1A are required for HSF1 activation in vitro; antisense oligonucleotides or short interfering (si)RNA against HSR1 impair the heat-shock response in vivo, rendering cells thermosensitive. The central role of HSR1 during heat shock implies that targeting this RNA could serve as a new therapeutic model for cancer, inflammation and other conditions associated with HSF1 deregulation.

Activation of Akt, or protein kinase B, is frequently observed in human cancers. Here we report that Akt activation via overexpression of a constitutively active form or via the loss of PTEN can overcome a G 2 /M cell cycle checkpoint that is induced by DNA damage. Activated Akt also alleviates the reduction in CDC2 activity and mitotic index upon exposure to DNA damage. In addition, we found that PTEN null embryonic stem (ES) cells transit faster from the G 2 /M to the G 1 phase of the cell cycle when compared to wild-type ES cells and that inhibition of phosphoinositol-3-kinase (PI3K) in HEK293 cells elicits G 2 arrest that is alleviated by activated Akt. Furthermore, the transition from the G 2 /M to the G 1 phase of the cell cycle in Akt1 null mouse embryo fibroblasts (MEFs) is attenuated when compared to that of wild-type MEFs. These results indicate that the PI3K/PTEN/Akt pathway plays a role in the regulation of G 2 /M transition. Thus, cells expressing activated Akt continue to divide, without being eliminated by apoptosis, in the presence of continuous exposure to mutagen and accumulate mutations, as measured by inactivation of an exogenously expressed herpes simplex virus thymidine kinase (HSV-tk) gene. This phenotype is independent of p53 status and cannot be reproduced by overexpression of Bcl-2 or Myc and Bcl-2 but seems to counteract a cell cycle checkpoint mediated by DNA mismatch repair (MMR). Accordingly, restoration of the G 2 /M cell cycle checkpoint and apoptosis in MMRdeficient cells, through reintroduction of the missing component of MMR, is alleviated by activated Akt. We suggest that this new activity of Akt in conjunction with its antiapoptotic activity may contribute to genetic instability and could explain its frequent activation in human cancers.Akt, or protein kinase B (PKB), is a serine/threonine kinase that has been implicated in the control of major cellular functions such as transcription, protein synthesis, and carbohydrate and lipid metabolism, and it is a downstream effector of growth factor-mediated cell survival. Normally, Akt is activated by growth factors that activate phosphoinositol-3-kinase (PI3K). Upon activation, PI3K phosphorylates the inositol ring at the D3 position, which in turn serves to anchor Akt to the plasma membrane, where it is phosphorylated and fully activated by the 3-phosphoinositide-dependent kinases PDK1 and PDK2. Phospholipid phosphatases such as PTEN and SHIP decrease the pool of available phospholipids and therefore are negative regulators of Akt. Activated Ras, at least in certain circumstances, can up-regulate PI3K and therefore is a potential activator of Akt as well (13,22). Overall, positive regulators of Akt are commonly up-regulated in human cancers, while PTEN is frequently lost or inactivated by mutations (7, 36). Furthermore, heterozygous deletion of PTEN in mice elicits a wide range of spontaneous tumors; this has been attributed mainly to activation of Akt (12,34,38). Finally, activated forms of Akt induce cellular transformation (4). ...