Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining

We did experiments in a three-round bargaining game where the (perfect) equilibrium offer was $1.25 and an equal split was $2.50. The average offer was $2.11. Patterns of information search (measured with a computerized information display) show limited lookahead rather than backward induction. Equilibrium theories which adjust for social utilities (reflecting inequality-aversion or reciprocity) cannot explain the results because they predict subjects will make equilibrium offers to “robot” players, but offers to robots are only a little lower. When trained subjects (who quickly learned to do backward induction) bargained with untrained subjects, offers ended up halfway between equilibrium and $2.11. Journal of Economic Literature Classification Numbers: C7, C9.     

Bargaining under a deadline: evidence from the reverse ultimatum game

We study a “reverse” ultimatum game, in which proposers have multiple chances to offer responders a division of some fixed pie. The game ends if the responder accepts an offer, or if, following a rejection, the proposer decides not to make a better offer. The unique subgame perfect equilibrium gives the proposer the minimum possible payoff. Nevertheless, the experimental results are not too different from those of the standard ultimatum game, although proposers generally receive slightly less than half of the surplus.We use the reverse ultimatum game to study deadlines experimentally. With a deadline, the subgame perfect equilibrium prediction is that the proposer gets the entire surplus.Deadlines are used strategically to influence the outcome, and agreements are reached near the deadline. Strategic considerations are evident in the differences in observed behavior between the deadline and no deadline conditions, even though agreements are substantially less extreme than predicted by perfect equilibrium.     

Cultural Differences in Ultimatum Game Experiments: Evidence from a Meta-Analysis

This paper reports the findings of a meta-analysis of 37 papers with 75 results from ultimatum game experiments. We find that on average the proposer offers 40% of the pie to the responder. This share is smaller for larger pie sizes and larger when a strategy method is used or when subjects are inexperienced. On average 16% of the offers is rejected. The rejection rate is lower for larger pie sizes and for larger shares offered. Responders are less willing to accept an offer when the strategy method is employed. As the results come from different countries, meta-analysis provides an alternative way to investigate whether bargaining behavior in ultimatum games differs across countries. We find differences in behavior of responders (and not of proposers) across geographical regions. With one exception, these differences cannot be attributed to various cultural traits on which for instance the cultural classifications of Hofstede (1991) and Inglehart (2000) are based.     

On Perceptions of Fairness: The Role of Valuations, Outside Options, and Information in Ultimatum Bargaining Games

This study examines fairness perceptions in ultimatum bargaining games with asymmetric payoffs, outside options, and different information states. Fairness perceptions were dependent on treatment conditions. Specifically, when proposers had higher chip values, dollar offers were lower than when responders had higher chip values. When responders had an outside option, offers were higher and were rejected less often than when proposers had an outside option. However, a given offer was rejected more often when responders had an outside option. Therefore, similar to the first mover advantage, the “advantaged” or “entitled” player received a higher monetary payoff than they would otherwise. When there was complete information about payoff amounts (payoff conversion rates and outside options), rejections occurred more often, and given offer amounts were rejected more often than when there was incomplete information. When there was incomplete information, offers were higher in the initial rounds than in the final rounds. These results suggest that proposers made offers strategically, making offers that would not be rejected, rather than out of a concern for fairness.     

中国居民医疗保险购买行为研究-基于商业健康保险的角度

本文通过健康保险市场供需双方行为分析,构建居民医疗保险购买行为模型,利用中国健康与营养调查数据(2000—2006),运用部分观测的二元Probit估计方法(Bivariate Probit with partial observability),从实证的角度分析商业健康保险市场中供需双方各自的风险选择行为,以及城乡地区居民对商业健康保险的潜在需求行为及其宏微观影响因素。本文发现:(1)城乡居民都存在显著的逆向选择行为;(2)城乡社会医疗保障对居民商业健康保险需求行为有显著的促进作用;(3)影响居民商业健康保险行为的其他因素还包括,个人的风险偏好和经济购买力。     

The dynamics of responder behavior in ultimatum games: a meta-study

Using data aggregated from seven papers that study repeated play in standard ultimatum games with either stranger or absolute stranger matching, we show that the behavior of responders changes with experience. High offers are more likely to be accepted with experience and low offers are more likely to be rejected. At the individual level, there is a negative relationship between the likelihood that a given offer is accepted and the size of the preceding offer. We compare the results with predictions generated by static models of distributional preferences, implicitly dynamic models of preferences with reciprocity, and explicitly dynamic models of adaptive learning. The data is most consistent with models of preferences with reciprocity.     

Tests of Fairness Models Based on Equity Considerations in a Three-Person Ultimatum Game

Two recent models incorporating fairness considerations into the economics literature based on agents' concerns about the distribution of payoffs between themselves and others (Fehr-Schmidt, 1999,Quarterly Journal of Economics. 114 (3), 769–816; Bolton-Ockenfels, 2000,American Economic Review. 90, 166–193) are investigated using a new three-person ultimatum game: One person allocates a sum of money to two others, one of which is randomly chosen to accept or reject the offer. Rejection gives both the responder and the proposer zero income and a positive consolation prize for the non-responder. The data show essentially no reductions in rejection rates, holding offers constant, with and without consolation prizes, contrary to both models' predictions.     

Strategic delay and endogenous offers in bargaining games with private information

This paperendogenously determines the order of offers and the duration of delay in reaching agreement between buyers and sellers in a continuous-time bargaining game in which a seller wishes to vend an object of known cost to a buyer, to whom the value of the good is private information, and in which each player can choose to strategically delay a response to a previous offer or to interrupt the delay of his rival. Both buyers and sellers are shown to prefer to move first in a model of bargaining in which: (1) either player can make the first offer; (2) after the minimum time has elapsed from the previous offer, either player can make an offer; and (3) players can choose to strategically delay and refrain from making an offer after the previous offer. When the buyer moves first, the equilibrium response for the seller is to accept the offer immediately. When the seller moves first the equilibrium is characterized by the seller making all but the last offer, with minimal feasible delay between successive offers. Observable endogenous delay in reaching an agreement in such equilibria approaches zero as the minimal feasible delay between offers approaches zero. This indicates that in noncooperative bargaining models with private information, where players can strategically delay their offers, endogenizing the order in which players make offers removes the ability of informational asymmetries to generate equilibria exhibiting endogenous delay in reaching an agreement.     

An Experimental Study on Dividing Gains through Politics

This article offers experimental evidence to examine an important case in politics where a monopolistic proposer seeks a majority's consent from competitive responders to split the gain. The unique subgame perfect equilibrium prediction is that the side of trade with a monopoly will exploit the side of trade with competition to reap almost all of the gain. Our experimental evidence reveals that while responders do compete with each other to race to the bottom (consistent with the prediction), the monopolistic proposer settles down to offer a ‘fair’ share of the pie to those from whom he or she seeks majority support (contrary to the prediction).     

Nudging Merit Goods: Conceptual,Normative, and Practical Connections

Abstract

Mainstream economics has traditionally maintained a respect for preferences and the choices that individuals make based on them. But recent advances in psychology and behavioral economics have led scholars and policy-maker to doubt if people make wise choices in their own interests. Based on this, libertarian paternalists endorse choice interventions—nudges—designed to steer people to decisions that will better promote their interests. However, the complex, multifaceted, and subjective nature of interests implies that policy-makers are imposing externally chosen interests for people’s own when designing nudges. In this sense, policy-makers are treating the interests they choose to advance like merit goods as described by Richard Musgrave, goals or ends that are explicitly judged by policy-makers to be worth advancing even if they are not ranked highly or chosen consistently by individuals themselves. This paper will make explicit the conceptual and normative connections between nudges and merit goods, arguing that nudges can be considered delivery mechanisms for merit goods, and recommending that libertarian paternalists abandon their claim to be advancing people’s true interests and instead adopt the objective theories of good used to justify merit goods.     

Cognitive ability and human behavior in experimental ultimatum games

Recent researches have shed light on the effect of cognitive ability on economic decision-making. By measuring cognitive ability applying Raven's progressive matrix test, we obtain two significant results that this effect affects decision-making in two types of experimental ultimatum games. First, the higher the cognitive ability, the larger the amount a sender offers when the offer is smaller than or equal to the half split. Second, the higher the responders’ cognitive ability, the smaller the offer they accept, when they accept it or not with the strategy method. This study not only finds new factors that affect decision-making in experimental ultimatum games, but also provides more evidences that cognitive ability influences economic decision-making.     

Inside the Crystal Ball of Finance: Understanding Financial Economists' Attitudes to Market and Society

Market economists are thought to wield tremendous power—not only over financial markets but over governments that stray from the ‘market way’. Still, there is mystery about what economists think, and how they form their judgements. This article reports results from a survey of over 50 financial market economists from leading financial institutions in Australia conducted in December 2003 and January 2004. It provides insight into the opinions of economists who impact on markets and policy, especially through media commentary. The article identifies their economic and social views, comparing them with the Australian public. We then examine how professional views of economists differ from their personal views. Differences in professional and private views—especially over the role of government and labour markets—are an opportunity to ponder how judgements are formed and used. We offer tentative answers to the question: do these professionals—highly paid for their opinions—occasionally self‐censor?     

JUST A BIG MISUNDERSTANDING? BIAS AND BAYESIAN AFFECTIVE POLARIZATION

I present a model of affective polarization—growth in hostility over time between two parties—via quasi-Bayesian inference. In the model, two agents repeatedly choose actions. Each choice is based on a balance of concerns for private interests and the social good. More weight is put on private interests when an agent's character is intrinsically more self-serving and when the other agent is believed to be more self-serving. Each agent Bayesian updates about the other's character, and dislikes the other more when she is perceived as more self-serving. I characterize the effects on growth in dislike of three biases: a prior bias against the other agent's character, the false consensus bias, and limited strategic thinking. Prior bias against the other's character remains constant or declines over time, and actions do not diverge. The other two biases cause actions to become more extreme over time and repeatedly be “worse” than expected, causing mutual growth in dislike, that is, affective polarization. The magnitude of dislike can become arbitrarily large—even when both players are arbitrarily “good” (unselfish). The results imply that seemingly irrelevant cognitive biases can be an important cause of the devolution of relationships, in politics and beyond, and that subtlety and unawareness of bias can be key factors driving the degree of polarization.     

Economic analysis of bevacizumab,cetuximab, and panitumumab with fluoropyrimidine-based chemotherapy in the first-line treatment of KRAS wild-type metastatic colorectal cancer (mCRC)

Abstract

Objective:

Colorectal cancer (CRC) is the third most commonly diagnosed cancer in Canada (excluding non-melanoma skin cancers). Bevacizumab is a recombinant humanized monoclonal antibody that selectively binds to human vascular endothelial growth factor. A sub-study confirmed its effectiveness in KRAS wild-type patients. Recent evidence has shown clinical benefit from anti-epidermal growth factor treatments cetuximab and panitumumab in these patients. The cost-effectiveness, to the Canadian healthcare system, of fluoropyrimidine-based chemotherapy (FBC) in combination with bevacizumab, cetuximab, or panitumumab was assessed for first-line treatment of KRAS wild-type mCRC patients.

Methods:

A Markov model was developed and calibrated to progression-free/overall survival, using separately reported trial survival and adverse event results for each comparator. Health-state resource utilization was derived from published data and oncologist input. Utilities and unit prices were obtained from published literature and standard Canadian sources.

Results:

Results per patient are over a lifetime horizon, to a maximum of 10 years, with 5% annual discounting. Comparators are ordered by total cost and the incremental cost-effectiveness ratio (ICER) of each is determined against the previous non-dominated therapy. Compared to FBC alone, bevacizumab?+?FBC has an ICER of $131,600 per QALY gained. Compared to bevacizumab?+?FBC, panitumumab?+?FBC is dominated and cetuximab?+?FBC has an ICER of $3.8 million per QALY. In probabilistic sensitivity analysis, bevacizumab?+?FBC had ～100%, ～100%, and 98.9% probabilities of being more cost-effective than both of the other combination treatments at thresholds of $50,000/QALY, $100,000/QALY, and $200,000/QALY, respectively.

Conclusion:

For first-line treatment of KRAS-WT mCRC, bevacizumab?+?FBC is associated with substantially lower costs as compared to panitumumab?+?FBC or cetuximab?+?FBC. Key limitations were that survival curves and adverse event rates were taken from separate clinical trials and that an indirect comparison was not included. Given these findings, bevacizumab is likely to offer the best value for money for this patient population.     

Did growth and reforms increase citizens' support for the transition?

How did post-communist transformations affect people's perceptions of their economic and political systems? We model a pseudo-panel with 89 country-year clusters, based on the aggregation of about eighty thousand interviews conducted in 14 countries between 1991 and 2004, to identify the macro and institutional drivers of the public opinion. We find that: (i) When the economy is growing, on average people appreciate more extensive reforms and dislike unbalanced reforms. They dislike reforms when they are associated with higher unemployment. (ii) Nostalgia for the past regime increases when worsening income distribution or higher inflation interact with more privatizations of state enteprises. (iii) Cross-country differences in the attitudes towards the present and future are largely explained by differences in the institutional indicators for the rule of law and corruption. (iv) Cross-country differences in the extent of nostalgia towards the past are related to differences in the deterioration of standards of living.     

UNPREPARED FOR FINANCIAL SHOCKS: EMERGENCY SAVINGS AND CREDIT CARD DEBT

We measure readiness to face emergency expenses using data from a representative survey of U.S. consumers. Our main findings are as follows: (1) there is substantial heterogeneity in financial readiness, with lowest‐income, least‐educated, unemployed, and Black consumers most likely to have $0 saved for emergency expenses; (2) the amount of emergency savings is correlated with payment choice: Less financially prepared individuals use cash more and credit cards less, compared to those with higher emergency savings; (3) while people with low emergency savings rely more on cash than credit cards, they revolve more debt, and so a financial shock is costlier for them; (4) changes in income from one year to the next do not appear to affect the likelihood of revolving on credit cards or increase the amount borrowed, although the data were collected before the COVID‐19 pandemic. For those with little or no savings and already financially vulnerable, even a temporary financial shock—an unexpected negative income shock (such as a layoff or a short‐term government shutdown) or an unexpected expenditure (such as a medical expense or a car repair)—could have severe financial consequences, exacerbated by the high cost of borrowing on credit cards. (JEL D12, D14, D15, E21)     

Basic income in the United States: Redefining citizenship in the liberal state

This paper examines citizenship-based arguments for work-conditioned welfare and basic income. I argue that the most common citizenship-based justifications for work requirements—the paternalistic and civic republican arguments—are flawed because of their selectivity, and that the only defensible citizenship-based justification for work requirements is the socialist model, which enforces work requirements universally on all. I offer as a liberal alternative a radically pluralist notion of citizenship, with a kind of universal economic suffrage at its core, to justify an unconditional basic income in the US.     

Asymmetric Information in Simple Bargaining Games: An Experimental Study

Bilateral bargaining situations are often characterized by informational asymmetries concerning the size of what is at stake: in some cases, the proposer is better informed, in others, it is the responder. We analyze the effects of both types of asymmetric information on proposer behavior in two different situations which allow for a variation of responder veto power: the ultimatum and the dictator game. We find that the extent to which proposers demand less in the ultimatum as compared to the dictator game is (marginally) smaller when the proposer is in the superior information position. Further we find informed proposers to exploit their informational advantage by offering an amount that does not reveal the true size of the pie, with proposers in the ultimatum game exhibiting this behavioral pattern to a larger extent than those in the dictator game. Uninformed proposers risk imposed rejection when they ask for more than potentially is at stake, and ask for a risk premium in dictator games. We concentrate on proposers, but also explore responder behavior: We find uninformed responders to enable proposers’ hiding behavior, and we find proposer intentionality not to play an important role for informed responders when they decide whether to accept or reject an offer by an (uninformed) proposer.     

Cost per responder analysis in patients with secondary hyperparathyroidism on dialysis treated with cinacalcet

Abstract

Background:

Growing financial pressure on US dialysis providers requires economic efficiency considerations. The objective of this study was to examine short-term economic efficiencies of a cinacalcet-based treatment approach for secondary hyperparathyroidism.

Methods:

This study retrospectively assessed cost per biochemical response of the OPTIMA trial. OPTIMA was conducted in end-stage renal disease patients to compare biochemical control in patients receiving cinacalcet in addition to vitamin D sterols and phosphate binders vs patients receiving vitamin D sterol and phosphate binders alone. It explored three laboratory measurement response definitions from baseline to week 23: (1) decreases in parathyroid hormone (PTH) ≥30%; (2) PTH?≤?300?pg/ml; and (3) PTH?≤?300?pg/mL, calcium <9.5?mg/dL and phosphorus <5.5?mg/dL. Medication use and costs were measured to calculate average costs and incremental cost per responder. Stratification by lower and higher baseline PTH assessed cost per response by disease severity.

Results:

There were 38–77% more responders with cinacalcet vs control, depending on response definition. Mean (SD) per patient total medication costs were $5423 ($3698) for cinacalcet and $2633 ($2334) for control, leading to a mean difference of $2790 over 23 weeks. When response was defined as a decrease in PTH?≥?30% from baseline, the average cost per responder was $11,266 for control vs $7027 for cinacalcet. The incremental cost per incremental responder ranged from $5186–$9168. Across all response measures, cost per responder was lower in patients with lower baseline PTH.

Conclusions:

Representing a more efficient allocation of economic resources over the short-term, cinacalcet-based treatment algorithm led to a lower cost per biochemical response, particularly in patients with lower disease severity, vs vitamin D sterols and phosphate binders alone. These findings should be interpreted alongside the study limitation of converting international trial-based medication utilization into US costs.     

Fairness, errors and the power of competition

In this paper, we investigate the effects of competition on bargained outcomes. We show that the neglect of either fairness concerns or decision errors will prevent a satisfactory understanding of how competition affects bargaining. We conducted experiments which demonstrate that introducing a small amount of competition to a bilateral ultimatum game – by adding just one competitor – induces large behavioral changes among responders and proposers, causing large changes in accepted offers. Models that assume that all people are self-interested and fully rational do not adequately explain these changes. We show that a model which combines heterogeneous fairness concerns with decision errors correctly predicts the comparative static effects of changes in competition. Moreover, the combined model is remarkably good at predicting the entire distribution of offers in many different competitive situations.