Who Wouldn't Pay A Penny For A Sports Car?

The right strategy doesn't guarantee advantage in auctions, real estate or stock market

Who wouldn't pay a penny for a sports car? That's the mentality some popular online auctions take advantage of -- the opportunity to get an expensive item for very little money.

Lotus Super 7

Credit: Wikipedia 

In a study of hundreds of lowest unique bid auctions, Northwestern University researchers asked a different question: Who wins these auctions, the strategic gambler or the lucky one? The answer is the lucky. But, ironically, it's a lucky person using a winning strategy.

The researchers found that all players intuitively use the right strategy, and that turns the auction into a game of pure chance. The findings, published by the journal PLoS One, provide insight into playing the stock market, real estate market and other gambles.

"There are many contexts in which we think we are smart and at an advantage, such as buying real estate as prices start moving up," said Luís Amaral, an author of the paper. "But we don't realize we are competing against people doing the same thing. The advantage is gone, and it becomes a game of chance. So you better enjoy the process."

Amaral is a professor of chemical and biological engineering in the McCormick School of Engineering and Applied Science and an Early Career Scientist with the Howard Hughes Medical Institute.

He and colleagues Filippo Radicchi and Andrea Baronchelli studied public data on 600 online auctions in Australia and Europe, played by 10,000 different auction participants with a total of 200,000 individual bids. (Lowest unique bid auctions occur all around the world, including in the U.S.) The data allowed the researchers to analyze in a systematic way what is going on in each auction.

The work of Nobel Laureate John Nash on game theory is very relevant to these auctions, Amaral said. An online auction is a classic game -- you have some information and you try to guess what other people are doing, and, based on that guess, you try to define your best strategy.

In a lowest unique bid auction, participants place bids for a relatively valuable item, such as a car or boat, in an attempt to have the lowest unmatched bid at the time the auction ends. The lowest bid is one cent, and the participant pays a fee, often a dollar, for each bid. After placing a bid, the participant is told if his or her bid currently is winning. If not, many bid again. Hundreds of times. On average, the auctioneer earns double the cost of the item being auctioned while participants can pay hundreds of dollars to lose.

The researchers conducted a computer simulation and identified what the optimal strategy is in lowest unique bid auctions. They found the strategy is a "bursty" one: consecutive bid values initially are close to each other, and then there is a "long jump" to another area of the bid space where more bid values are placed close to each other. And the pattern is repeated.

For example, an auction participant might place a bid, say of 8 cents. Then he places a number of nearby bids, 5, 6 and 7 cents, as well as 9, 10 and 11 cents. Then he makes a large leap to a different area, placing a bid of 47 cents and also placing several bids around that number. (Remember, every time he places a bid, he pays a fee.)

This mixed strategy combines exploitation (taking small steps in one area) and exploration (taking a big step to a new area). It is a smart strategy that gives you a better chance of winning, but the researchers discovered all the other participants have figured it out, too, wiping out any advantage to individuals.

"We couldn't identify a single person who was not using this strategy," Amaral said.

The "bursty" optimal strategy, he said, is similar to what an animal foraging for scarce food employs. An albatross, for example, has a vast ocean to explore, so it focuses its fishing in a small area for a time and then moves a great distance to try another area. Then it repeats this pattern.

In lowest unique bid auctions, people like to win and become overly optimistic about the amount of money they will lose. They rationally enter the auction to try to win a valuable item for a low price, but then they go on to irrationally stay in the auction -- which is just a game of chance -- and bid too much.

"At some point people will stop playing these online auctions," Amaral said. "Humans are smart about recognizing the deck is stacked against them."

The title of the PLoS One paper authored by Amaral, Radicchi and Baronchelli is "Rationality, Irrationality and Escalating Behavior in Lowest Unique Bid Auctions." Radicchi is a former postdoctoral fellow in Amaral's lab who now is at the University Rovira i Virgili, Tarragona, Spain. Baronchelli is with the Universitat Politècnica de Catalunya, Spain.

Contacts and sources: 

Megan Fellman 
Northwestern University

Obesity Raises Death Risk Tied To Sleeping Pills

Obesity appears to significantly increase the risk of death tied to sleeping pills, nearly doubling the rate of mortality even among those prescribed 18 or fewer pills in a year, researchers reported Friday. New findings delivered at American Heart Association meeting also show heightened risk in men and young adults

"Obesity emerged as a marker of increased vulnerability," said Robert Langer, M.D., M.P.H., at the annual American Heart Association's Epidemiology and Prevention | Nutrition, Physical Activity and Metabolism 2012 Scientific Sessions in San Diego.

"The associations between sleeping pills and increased mortality were present, and relatively stronger, even in people aged 18 to 54," said Dr. Langer, a family physician and epidemiologist with the Jackson Hole Center for Preventive Medicine in Jackson, Wyo.

"Obese patients appear particularly vulnerable, perhaps through interaction with sleep apnea," said study co-author Daniel Kripke, M.D., a psychiatrist with Scripps Clinic's Viterbi Family Sleep Center in San Diego.

He noted that sleeping pills were previously associated with more and longer pauses in breathing in people with sleep apnea.

Among obese patients, use of sleeping pills was associated with about one extra death per year for every 100 people who were prescribed the medications, Dr. Langer said.

Additionally, men who took sleeping pills were about twice as likely to die as women who received the medications, after accounting for other factors, he said.

Friday's findings were the latest to emerge from a Scripps Clinic-led study of almost 40,000 patients, which was initially published in late February in the open-access online journal BMJ Open.

(View the paper here: http://bmjopen.bmj.com/content/2/1/e000850.full)

The research was the first to show that eight of the most commonly used hypnotic drugs were associated with increased hazards of mortality and cancer, including the popularly prescribed medications zolpidem (known by the brand name Ambien) and temazepam (also known as Restoril), Dr. Kripke said.

Those drugs had been thought to be safer than older hypnotics because of their shorter duration of action but were found to have associations with excess deaths no different from the older drugs they have largely replaced.

In order to eliminate the possibility that other factors led to the results, study participants who were prescribed sleeping pills were matched with control patients of similar ages, gender and health who did not receive hypnotics.

The newest findings were delivered by Dr. Langer during an oral session at the American Heart Association conference that focused on drug safety.

For obese patients in the study who had an average body mass index of 38.8, the risk of death was 8.1 times higher on average among those who were prescribed the smallest number of pills (18 or fewer annually) when compared with similar study participants who did not take the medications. The mortality rate was 9.3 times higher on average among obese patients receiving the largest number of pills (132 or more annually).

Death was 4.6 times more likely on average among all patients who received any amount of sleeping pills.

The study cast a shadow over a growing segment of the pharmaceutical industry that expanded by 23 percent in the United States from 2006 to 2010 and generated about $2 billion in annual sales.

Using data stored in an electronic medical record that has been in place for more than a decade, the researchers obtained information on almost 40,000 patients cared for by a large integrated health system in the northeastern United States.

The research included 10,531 sleeping pill users who were prescribed the medications for an average of 2.5 years and 23,674 control participants who were not prescribed the drugs. Information came from outpatient clinic visits conducted between Jan. 1, 2002, and Sept. 30, 2006.

"It is important to note that our results are based on observational data, so even though we did everything we could to ensure their validity, it's still possible that other factors explain the associations," said co-author Lawrence E. Kline, D.O., who is medical director of the Viterbi Family Sleep Center. "We hope our work will spur additional research in this area using information from other populations."

Funding for the study came from the Scripps Health Foundation and other philanthropic sources.

The research should prompt physicians to consider alternatives to hypnotic medications, Dr. Kline said.

Clinicians at the Viterbi Family Sleep Center focus on cognitive therapy that teaches patients to better understand the nature of sleep. For example, some people suffering from insomnia might require less than the eight hours of sleep commonly recommended for each night.

Patients also can benefit from practicing good sleeping habits and relaxation, as well as taking advantage of the body's natural clock, which is driven by the rising and setting of the sun, Dr. Kline said. "Understanding how to use the circadian rhythm is a very powerful tool that doesn't require a prescription," he said.

When insomnia results from emotional problems such as depression, doctors should treat the psychological disorder rather than prescribe sleeping pills that could prove to be harmful, Dr. Kripke said.

Contacts and sources: 

Keith Darce
Scripps Health

Nano Rescues Skin: Shrimp Shell Nanotech For Wound Healing And Anti-Aging Face Cream

Shrimp shell nanotech for wound healing and anti-aging face cream

Nanoparticles containing chitosan have been shown to have effective antimicrobial activity against Staphylococcus saprophyticus and Escherichia coli. The materials could be used as a protective wound-healing material to avoid opportunistic infection as well as working to facilitate wound healing.

Chitosan is a natural, non-toxic and biodegradable, polysaccharide readily obtained from chitin, the main component of the shells of shrimp, lobster and the beak of the octopus and squid. Its antimicrobial activity is well known and has been exploited in dentistry to prevent caries and as preservative applications in food packaging. It has even been tested as an additive for antimicrobial textiles used in clothing for healthcare and other workers.

Now, Mihaela Leonida of Fairleigh Dickinson University, in Teaneck, New Jersey and colleagues writing in the International Journal of Nano and Biomaterials describe how they have prepared nanoparticles of chitosan that could have potential in preventing infection in wounds as well as enhancing the wound-healing process itself by stimulating skin cell growth.

The team made their chitosan nanoparticles (CNP) using an ionic gelation process with sodium tripolyphosphate. This process involves the formation of bonds between polymers strands, a so-called cross-linking process. Conducted in these conditions it precludes the need for complex preparative chemistry or toxic solvents. CNP can also be made in the presence of copper and silver ions, known antimicrobial agents. The researchers' preliminary tests show the composite materials to have enhanced activity against two representative types of bacteria.

Understanding the mechanism of inhibition of bacteria by these particles may lead to the preparation of more effective antibacterial agents. The team has also demonstrated that the CNP have skin regenerative properties in tests on skin cell fibroblasts and keratinocytes, in the laboratory, which might even have implications for anti-aging skin care products.

Contacts and sources:

Mihaela D. Leonida
Inderscience Publishers

"Nanocomposite materials with antimicrobial activity based on chitosan" in Int. J. Nano and Biomaterials, 2012, 3, 316-334