Decrease in amygdala activity during repeated exposure to spider images predicts avoidance behavior in spider fearful individuals

Spider phobia is characterized by exaggerated fear of situations where spiders could be present, resulting in avoidance of such situations and compromised quality of life. An important component in psychological treatment of spider phobia is exposure to phobic situations that reduces avoidance behaviors. At the neural level, amygdala responses to phobic material are elevated, but normalizes following exposure treatment. To what extent amygdala activity decreases during a session of repeated phobic stimulation, and whether activity decrease is related to subsequent avoidance is not well studied. We hypothesized reduced amygdala activity during the course of repeated exposure to spider pictures, and that the degree of reduction would predict subsequent avoidance of spider pictures. To test our hypothesis, functional magnetic resonance imaging was performed in 45 individuals with spider fear during repeated exposure to spider pictures. Results showed that repeated exposure to spider stimuli attenuated amygdala reactivity and individual differences in activity reductions predicted subsequent avoidance behavior to spider pictures in an incentive-conflict task, with larger attenuations predicting less avoidance. At 6-month follow up, initial reductions in amygdala activation still predicted avoidance. This result demonstrates that reduction in amygdala responses is related to clinically meaningful outcomes in human anxiety, and suggests that within-session reductions in amygdala responses could be an important mechanism explaining the clinical effects of exposure therapy.

Mitigating risk incentives by issuing convertible bonds: A refinement to the Black–Scholes evaluation model

This study employs option pricing theory to analyze the risk incentive conflict between shareholders and creditors. It evaluates the volatility of investment projects funded by borrowed money and compares their gains for the shareholder and creditor. Our analysis is based on the recognition that shareholders' and creditors' objectives may differ. We identify the shareholder's risk incentive as a source of agency cost originating with the shareholder and find that issuing a convertible bond avoids agency cost without diluting existing shareholders' ownership. Numerical examples are shown to examine it.

Organizing for Synergies

Large companies are usually organized into business units, yet some activities are almost always centralized in a company-wide functional unit. We first show that organizations endogenously create an incentive conflict between functional managers (who desire excessive standardization) and business-unit managers (who desire excessive local adaptation). We then study how the allocation of authority and tasks to functional and business-unit managers interacts with this endogenous incentive conflict. Our analysis generates testable implications for the likely success of mergers and for the organizational structure and incentives inside multidivisional firms. (JEL D23, D86, G34, L22)