Ultimatum Bargaining Behavior in Israel, Japan, Slovenia, and the United States: A Social Utility Analysis

We explain the main features of the results of the four-country ultimatum bargaining experiments of Roth et al. (1991), Amer. Econom. Rev.81, 1068–1095) by a social utility model. The specification of social utility of a player has two parts: a linear combination of the monetary payoffs of the proposer and the responder and payoff uncertainty. We find that, on average, responders have negative regard for proposers' earnings in all countries. Proposers have negative regard for responders' monetary earnings in countries where responders have high negative regard for proposers' earnings (USA and Slovenia). In countries where responders have low negative regard for proposers' earnings (Israel and Japan), proposers are expected payoff maximizers. Journal of Economic Literature Classification Numbers: A13, C19, C44, C72, C92, D63, D64.     

Testing for Ongoing Convergence in Transition Economies, 1970 to 1998

In this paper, the authors use a time-varying parameters procedure to test for a common growth path in the ex-Communist bloc, both pre- and postreform. They test whether there has been convergence within the bloc or between the bloc as a group and the West. Surprisingly, there is little evidence of convergence within the bloc, which brings into question the effectiveness of policies to reduce differentials in income per capita under the Communists. There is also little evidence of convergence with respect to the West, either during the period from 1970 to 1990 or if the reform years are included (i.e., 1970 to 1998). J. Comp. Econ., December 2001, 29(4), pp. 677–691. © 2001 Elsevier ScienceJournal of Economic Literature Classification Numbers: O40, C22, C23, C15.     

EXPERIMENTAL WORK ON SUBSIDIES,MORAL HAZARD,AND MARKET POWER IN AGRICULTURAL MARKETS

Laboratory markets are created to capture the important features of agricultural commodity markets. Sellers make production decisions and hold inventories before goods are sold. In a posted‐bid auction environment, price supports create a moral hazard for sellers. Part of the price‐support subsidy is transferred to buyers in the form of lower prices, which are close to those predicted by the buyers' Cournot level. The subsidy program is expensive for this reason. Lump‐sum payments correct the moral hazard problem and are better at transferring income to sellers. However, transfers made at the beginning of each production period cause a decline in production levels. (JEL D44, C92)     

Economic burden of hepatitis C-associated diseases: Europe,Asia Pacific,and the Americas

Abstract

Background:

Globally, hepatitis C virus (HCV) infects ～3% of the population. The objective of this study was to review published work and determine the direct medical costs for diseases associated with HCV infection globally, with the exception of the US.

Methods:

A systematic literature search was conducted to identify studies reporting the costs of hepatitis C sequelae between January 1990 and January 2011. Over 400 references were identified, of which 45 were pertinent. The costs were compiled, converted to US dollars, and adjusted to 2010 costs using the medical component of the consumer price index.

Results:

The median cost of liver transplants was estimated at $139,070 ($15,430–$443,700), refractory ascites at $16,740 ($8990–$35,940), hepatocellular carcinoma (HCC) at $15,310 ($3370–$84,710), decompensated cirrhosis at $14,660 ($3810–$48,360), variceal hemorrhage at $12,190 ($3550–$46,120), hepatic encephalopathy at $9180 ($5370–$50,120), diuretic sensitive ascites at $3400 ($1320–$7470), compensated cirrhosis at $820 ($50–$2890), and chronic hepatitis C at $280 ($90–$1860). The variation among studies was mainly due to the methodology used to assess cost, local cost and government reimbursement, and country-specific treatment protocols.

Limitations:

All costs were adjusted to 2010 US dollars using the US medical component of the consumer price index (CPI) which may not reflect the change in medical costs in other countries. In addition, the costs, in the local currency were converted to US dollars in the year of the study. However, medical expenses may not vary with exchange rate, leading to artificial variations. Finally, there was no assessment of the quality of individual studies, which resulted in the same weighting to all studies.

Conclusions:

Hepatitis C imposes a high economic burden globally. Knowing the burden of HCV sequelae is useful for policy decisions as well as serving as a basis for determining the value of HCV screening and treatment.     

UNCERTAIN INCOME,UNCERTAIN TAXES AND RICARDIAN EQUIVALENCE*

L. K. C. Chan (1983) and R. B. Barsky et al. (1986) have demonstrated that a tax cut financed by bonds to be repaid from proportional income taxes on uncertain future income, by reducing the latter's riskiness, stimulates current consumption - Ricardian equivalence does not hold. However, their two-period models exclude the possibility that future taxes are uncertain. In this paper a three-period model is developed that, by allowing the government two periods in which to collect taxes, introduces ex ante tax rate uncertainty. This renders the result concerning Ricardian equivalence ambiguous. By comparison, taxes levied as lump sums and via a ‘lottery’ respectively produce the ‘usual’ effects (zero and negative) on consumption.     

Inverse probability weighted M-estimators for sample selection, attrition, and stratification

I provide an overview of inverse probability weighted (IPW) M-estimators for cross section and two-period panel data applications. Under an ignorability assumption, I show that population parameters are identified, and provide straightforward -consistent and asymptotically normal estimation methods. I show that estimating a binary response selection model by conditional maximum likelihood leads to a more efficient estimator than using known probabilities, a result that unifies several disparate results in the literature. But IPW estimation is not a panacea: in some important cases of nonresponse, unweighted estimators will be consistent under weaker ignorability assumptions.JEL Classification: C13, C21, C23I would like to thank Bo Honoré, Christophe Muller, Frank Windmeijer, and the participants at the CeMMAP/ESCR Econometric Study Group Microeconometrics Workshop for helpful comments on an earlier draft.     

Communication, Risk, and Efficiency in Games

This paper uses curb sets to study the evolution of effective pre-play communication in games where a single communication round precedes a simultaneous-move, complete-information game. It is shown that the effectiveness of one-sided pre-play communication is inversely related to risk in the underlying game, and to the size of the message space. If messages have somea prioriinformation content, then multi-sided communication is more effective than one-sided communication; i.e., risk and the size of the message space play no role.Journal of Economic LiteratureClassification Number: C72.     

Rationalizability, Strong Rationality, and Expectational Stability

We examine the connection between two stability concepts of rational expectations equilibria: expectational stability, based on the convergence of iterations of expectations, and strong rationality, based on uniqueness of the rationalizable solutions of an associated game with restrictions on beliefs. To compare the concepts we embed a standard expectations model in a game-theoretic framework. It is shown that the two stability concepts coincide when agents are homogeneous. For the general case of heterogeneous agents we show that expectational stability is a necessary condition for strong rationality and we provide a sufficient condition for the latter. Journal of Economic Literature Classification Numbers: C72, C62.     

SALARY INEQUALITY,TEAM SUCCESS,LEAGUE POLICIES,AND THE SUPERSTAR EFFECT

Using a simple model of a team's salary distribution and data from the recent Collective Bargaining Agreement between players and owners in the National Hockey League, I examine the relationship between a team's salary distribution and its winning percentage. I find that teams with higher relative payrolls and lower salary inequality have higher winning percentages. I also find evidence of a superstar effect, in that teams with a higher maximum player salary have higher winning percentages. The results are sensitive, however, to the particular measure of salary inequality used as well as the endogeneity of the salary distribution. (JEL Z22, L83, J52, C33, C26)     

FORECASTING WOMEN,INFANTS, AND CHILDREN CASELOADS: A COMPARISON OF VECTOR AUTOREGRESSION AND AUTOREGRESSIVE INTEGRATED MOVING AVERAGE APPROACHES

Under the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), each state receives a fixed federal grant for the operation of WIC in the upcoming federal fiscal year. Accurate forecasting is vital because states have to bear the expenses of any underestimation of WIC expenditures. Using monthly data from 1997 through 2005, this paper examined the performance of two competing models, autoregressive integrated moving average (ARIMA) and vector autoregression (VAR), in forecasting New York WIC caseloads for women, infants, and children. VAR model predicted over $120,000 less per month in forecast errors in comparison to the ARIMA model. (JEL H7, C5)     

Implications of trust, fear, and reciprocity for modeling economic behavior

This paper reports three experiments with triadic or dyadic designs. The experiments include the moonlighting game in which first-mover actions can elicit positively or negatively reciprocal reactions from second movers. First movers can be motivated by trust in positive reciprocity or fear of negative reciprocity, in addition to unconditional other-regarding preferences. Second movers can be motivated by unconditional other-regarding preferences as well as positive or negative reciprocity. The experimental designs include control treatments that discriminate among actions with alternative motivations. Data from our three experiments and a fourth one are used to explore methodological questions, including the effects on behavioral hypothesis tests of within-subjects vs. across-subjects designs, single-blind vs. double-blind payoffs, random vs. dictator first-mover control treatments, and strategy responses vs. sequential play. Electronic Supplementary Material Supplementary material is available in the online version of this article at . JEL Classification C70, C91, D63, D64     

The impact of hepatitis C on labor force participation,absenteeism, presenteeism and non-work activities

Abstract

Objective:

Between 2.7 and 3.9 million people are currently infected with the hepatitis C virus (HCV) in the United States. Although many studies have investigated the impact of HCV on direct healthcare costs, few studies have estimated the indirect costs associated with the virus using a nationally-representative dataset.

Methods:

Using data from the 2009 United States (US) National Health and Wellness Survey, patients who reported a hepatitis C diagnosis (n?=?695) were compared to controls on labor force participation, productivity loss, and activity impairment after adjusting for demographics, health risk behaviors, and comorbidities. All analyses applied sampling weights to project to the population.

Results:

Patients with HCV were significantly less likely to be in the labor force than controls and reported significantly higher levels of absenteeism (4.88 vs. 3.03%), presenteeism (16.69 vs. 13.50%), overall work impairment (19.40 vs.15.35%), and activity impairment (25.01 vs. 21.78%). A propensity score matching methodology replicated many of these findings.

Conclusions:

While much of the work on HCV has focused on direct costs, our results suggest indirect costs should not be ignored when quantifying the societal burden of HCV. To our knowledge, this is the first study which has utilized a large, nationally-representative data source for identifying the impact of HCV on labor force participation and work and activity impairment using both a propensity-score matching and a regression modeling framework.

Limitations:

All data were patient-reported (including HCV diagnosis and work productivity), which could have introduced some subjective biases.     

Coordination, “Magic,” and Reinforcement Learning in a Market Entry Game

Previous experimental studies have documented quick convergence to equilibrium play in market entry games with a large number of agents. The present study examines the effect of the available information in a 12-player game in an attempt to account for these findings. In line with the prediction of a simple reinforcement learning model (Roth and Erev, 1995,Games Econ. Behav.8, 164–212), quick convergence to equilibrium is observed even given minimal information (unknown payoff rule). However, in violation of the basic model, information concerning other players' payoff increases the number of entrants. The information effect can be described by a variant of the basic reinforcement learning model assuming that the additional information changes the player's reference point.Journal of Economic LiteratureClassification Number: C7, C92.     

Preferences, Property Rights, and Anonymity in Bargaining Games

Research on ultimatum and dictator games has found that because of "fairness" first movers in such games offer more than noncooperative game theory predicts. We find that if the right to be the first mover is "earned" by scoring high on a general knowledge quiz, then first movers behave in a more self-regarding manner. We also conducted dictator double blind experiments, in which the experimenter could not identify the decision maker. The results yielded by far our largest observed incidence of self-regarding offers, suggesting that offers are due to strategic and expectation considerations. Journal of Economic Literature Classification Numbers: C78, C91.     

Evolutionary Analyses of Tacit Communication in Van Huyck, Battalio, and Beil's Game Experiments

This paper provides evolutionary interpretations of Van Huyck, Battalio, and Beil's experimental results on coordination game with auction. A set-valued solution concept is defined for a finite population model under a best response evolutionary dynamic and applied to their games. It is shown that our solution concept captures the role of auction as a tacit communication device and predicts the equilibria chosen by players in the real experiments. We also discuss the possibility of constructing a more realistic evolutionary learning model to explain the experimental results.Journal of Economic LiteratureClassification Numbers: C72, C92.     

Merging, Reputation, and Repeated Games with Incomplete Information

We relate and unify several results that appeared in the following domains: merging of probabilities, perturbed games and reputation phenomena, and repeated games with incomplete information. Journal of Economic Literature Classification Numbers: C72, D83.     

SYNCHRONIZATION OF ECONOMIC SHOCKS BETWEEN GULF COOPERATION COUNCIL AND UNITED STATES,EUROPE, JAPAN,AND OIL MARKET: CHOICE OF EXCHANGE RATE REGIME†

Using a structural vector autoregression (SVAR) with block exogeneity, this study examines the impacts of external shocks originating from the United States, the European Union, Japan, and the oil market as well as those of the regional shocks, on the oil‐rich countries of the Gulf Cooperation Council (GCC), viewed as a prospective monetary union. It takes into account the implications of the shock impacts for selecting an appropriate common exchange rate arrangement. The SVAR variance decomposition and impulse response analyses strongly underscore the relative impacts of the global shocks over the regional ones. The findings imply that the world's two major currencies, the U.S. dollar and the euro, should figure highly in a GCC's common basket of currencies. Accordingly, a transitional movement to a more flexible exchange rate arrangement such as a basket peg may be desirable for these trade‐dependent economies in the long run, as is argued in the optimal currency literature for developing countries. (JEL E52, O52, C22)     

The state spends first: Logic,facts, fictions,open questions

Keynesian (or Kaleckian) logic leads post Keynesian economists to presume that a variation of state revenues from taxes and sales of Treasury bonds are the result of a variation in state spending and not the other way around. In the past two decades, the exponents of modern monetary theory (MMT) have been at the forefront in asserting the Keynesian (or Kaleckian) logic of this proposition, filling a theoretical vacuum in post Keynesian thinking. The question is that MMT consolidates the Treasury and Central Bank (CB) so that the latter automatically creates purchasing power in favor of decisions of the former to spend. Critics, however, point out that most institutional arrangements forbid CBs to finance the Treasury directly. After Lavoie (2013 ———. “The Monetary and Fiscal Nexus of Neo-Chartalism: A Friendly Critical Look.” Journal of Economic Issues, 2013, 42, 1–32. Working paper version, 2013 (available at www.boeckler.de/pdf/v_2011_10_27_lavoie.pdf) [Google Scholar]), the debate has moved forward and seen some convergence. The present paper critically reviews for unfamiliar readers an otherwise almost esoteric but fundamental discussion.     

Expectations, Drift, and Volatility in Evolutionary Games

This paper proposes an evolutionary model of learning in simple coordination games where expectations are the driving force of the process. As time proceeds, agents adjust their expectations through some (possibly different) updating rules, whose only requirement is that of consistency with long stationary evidence. Sporadically, expectations are also subject to arbitrary perturbation. The main point of the paper is that, due to the possibility of random drift on expectations, the evolutionary process will be subject to high volatility across equilibria. Specifically, every Nash equilibrium (even if risk- or payoff-dominated) will have significant positive weight in the long-run invariant distribution. Journal of Economic Literature Classification Numbers: C73. D83. D84.     

Investment,interest rate rules,and equilibrium determinacy

Summary. By adding endogenous investment to a flexible-price, money-in-the-utility-function model, this paper studies the role that physical capital plays in stabilizing the real side of the economy when the monetary authority follows interest-rate feedback rules. We show that with inelastic labor supply equilibrium uniqueness is ensured under both active and passive monetary policies. For the case where money affects both preferences and technology, the uniqueness result remains true under active monetary policy. With endogenous labor supply, the uniqueness result holds again regardless of the stance of monetary policies for the case with separable leisure, but indeterminacy remains likely under both active and passive monetary policies when leisure is nonseparable.Received: 19 December 2001, Revised: 12 May 2003, JEL Classification Numbers: E52, O42.We are grateful to Jess Benhabib and an anonymous referee for helpful comments and suggestions. Correspondence to: C.K. Yip