Buried in paperwork: Excessive reporting in organizations

This paper offers an explanation for why a principal may demand too much paperwork from a subordinate: due to limited liability and moral hazard a principal is unable to appropriate all rents. Internal paperwork allows a more accurate monitoring of the agent and enables the principal to appropriate a larger part of the agent’s rent. In her decision the principal disregards the agent’s cost increase of more internal paperwork. Consequently, the requested amount of internal paperwork may be too high from both the agent’s personal point of view and the organization as a whole.     

Cost-effectiveness of stent-retriever thrombectomy in combination with IV t-PA compared with IV t-PA alone for acute ischemic stroke in the UK

Objective: To evaluate the cost-effectiveness of neurothrombectomy with a stent retriever (Solitaire**Solitaire Revascularization Device is a registered trademark of Medtronic (Irvine, CA).View all notes Revascularization Device) in treating acute ischemic stroke patients from the UK healthcare provider perspective.

Methods: A Markov model was developed to simulate health outcomes and costs of two therapies over a lifetime time horizon: stent-retriever thrombectomy in combination with intravenous tissue-type plasminogen activator (IV t-PA), and IV t-PA alone. The model incorporated an acute phase (0–90 days) and a rest of life phase (90+ days). Health states were defined by the modified Rankin Scale score. During the rest of life phase, patients remained in the same health state until a recurrent stroke or death. Clinical effectiveness and safety data were taken from the SWIFT PRIME study. Resource use and health state utilities were informed by published data.

Results: Combined stent-retriever thrombectomy and IV t-PA led to improved quality-of-life and increased life expectancy compared to IV t-PA alone. The higher treatment costs associated with the use of stent-retriever thrombectomy were offset by long-term cost savings due to improved patient health status, leading to overall cost savings of £33 190 per patient and a net benefit of £79 402. Deterministic and probabilistic sensitivity analyses demonstrated that the results were robust to a wide range of parameter inputs.

Limitations: The acute and long-term costs resource use data were taken from a study based on a patient population that was older and may have had additional comorbidities than the SWIFT PRIME population, resulting in costs that may not be representative of the cohort within this model. In addition, the estimates may not reflect stroke care today as no current evidence is available; however, the cost estimates were deemed reasonable by clinical opinion.

Conclusions: Combined stent-retriever neurothrombectomy and IV t-PA is a cost-effective treatment for acute ischemic stroke compared with IV t-PA alone.     

Cost of severe hypoglycaemia in nine European countries

Objective: Complications contribute largely to the economic gravity of diabetes mellitus (DM). How they arise and are treated differs substantially between countries. This paper assesses the total annual, direct, and indirect cost of severe hypoglycemia events (SHEs) in nine European countries: Bulgaria, Croatia, the Czech Republic, Greece, Hungary, Macedonia/the former Yugoslav Republic of Macedonia (MK), Poland, Slovenia, and Spain.

Methods: Data was collected on epidemiology, treatment structure, SHE-driven resource consumption, and unit costs. Two systematic reviews—on the SHE rates and the resources used for treatment—and data on the days-of-work lost due to SHE along with salaries and employment rates were used. The total SHE cost in each country was calculated and how the differences are driven by individual parameters was analysed.

Results: The annual costs of SHEs varied in absolute terms from €379,951.25 in MK up to €58,429,684.40 in Spain, or—when expressed per one drug-treated DM patient—from €5.47 in Bulgaria up to €17.74 in Spain. Indirect cost constituted between 6.01% (MK) and 26.49% (Hungary) of the total cost. The differences between countries are driven mostly by the cost of treating a single event, and this is related to general differences in prices.

Limitations: The main limitation is the lack of good quality data in some parts, and the necessity to use mean-value imputations, experts’ opinions, etc. Additionally, we only considered DM treatment as the SHE driver, while other elements, e.g. style of living, may contribute substantially.

Conclusions: A common framework can be applied to estimate the economic burden of SHE in various countries, allowing one to identify the drivers of differences in cost. Treating DM is complex, and so no resolute conclusions ought to be drawn as to whether SHE management is better in one country than another.     

Persuasion,binary choice,and the costs of dishonesty

We study the strategic interaction between a decision maker who needs to take a binary decision but is uncertain about relevant facts and an informed expert who can send a message to the decision maker but has a preference over the decision. We show that the probability that the expert can persuade the decision maker to take the expert’s preferred decision is a hump-shaped function of his costs of sending dishonest messages.     

An empirical analysis of ‘acting white’

Using a newly available data set, which allows one to construct a novel measure of a student's social status, we demonstrate that there are potentially important racial differences in the relationship between social status and academic achievement. The effect is concentrated among students with a grade point average (GPA) of 3.5 or higher and more pronounced in schools with more interracial contact. Earlier studies showing a positive relationship between popularity and academic achievement for blacks are sensitive to the inclusion of more continuous achievement measures. We argue that the data are most consistent with a model of ‘acting white’ in which investments in education are taken as a signal of one's opportunity costs of peer-group loyalty, though imprecise estimates make definitive conclusions difficult.     

Mediated contracts and mechanism design

The framework of incentive compatible finite direct coordination mechanisms in the sense of Myerson (1982) [5] is isomorphic to a framework of incentive compatible stochastic mediated contracts in the sense of Rahman and Obara (2010) [11] and Rahman (2009) [10]. The equivalence follows because the framework of Myerson (1982) [5] allows for a correlation between recommendations and transfers. The literature has hitherto not recognized the importance of this correlation for the structure of optimal contracts and for extending the revelation principle to address agency (moral hazard) problems.     

Using the U.S. Test of Financial Literacy in Germany—Adaptation and validation

In this article, the authors present the adaptation and validation processes conducted to render the American Test of Financial Literacy (TFL) suitable for use in Germany (TFL-G). First, they outline the translation procedure followed and the various cultural adjustments made in line with international standards. Next, they present results from the validation of the TFL-G's content and relations between test scores and external variables, including test takers' prior economic education and interest in economic topics. Preliminary analyses of data gathered from expert interviews and cognitive labs, and the results of the first administration to first-year higher education students (N = 1,108) indicate that the TFL-G is a valid instrument to assess young adults' understanding of personal finance in Germany. Perspectives for future research are discussed.     

Contracting with imperfect commitment and noisy communication

This paper provides new analytical tools for studying principal-agent problems with adverse selection and limited commitment. By allowing the principal to use general communication devices we overcome the literature's common, but overly restrictive focus on one-shot, direct communication. In addition, general communication devices solve two fundamental problems of contracting with imperfect commitment: First, they allow us to identify the ‘local downward’ incentive constraints as the relevant ones if the agent's preferences satisfy a single-crossing property. Second, we show how one may restrict the cardinality of the message spaces of the communication device. An example illustrates our arguments and the suboptimality of one-shot, direct communication.     

How giving affects giving: a long-term analysis of donations

Social preferences theories suggest that at least some people show altruistic behaviour. However, this philanthropic behaviour ranges from pure altruistic preferences to reluctant altruists. The fact that a subset of contributors has impure preferences raises questions regarding the stability of prosocial contributions. Assuming differences in other regarding preferences, we examine whether at an aggregated level monetary contributions are stable or fragile over time. We study the aggregated donations in the US from 1973 to 2013 using ARIMA and ARMAX models. The significant autoregressive and moving average coefficients in our estimations suggest that aggregated donations are highly autocorrelated. Our estimated impulse response functions indicate that aggregated donations converge to their historic mean quickly after an exogenous shock, which shows the stickiness of the inclination to donate.     

E-Based Solutions to Support Intercultural Business Ethics Instruction: An Exploratory Approach in Course Design and Delivery

This paper reports on the experiences of international MBA students following a hybrid design for a business ethics course, which combined class-based lectures with "out-of-class" discussion supported by asynchronous communication tools. The e-learning component of the course was intended to generate discussion on the ethical assumptions of course participants, with each individual required to post a mini case study reflecting an ethical dilemma which s/he had faced at work. Using questionnaire and interview data, we report on the learning experiences of participants following this experimental course. The results reveal a high level of intercultural dialogue between participants, with adopters showing greater awareness of their individual cultural biases in their case writing, a direct consequence of the on-line feedback and case discussion. These findings indicate that asynchronous tools have much to offer business ethics students, supporting ideas sharing and the exchange of cultural perspectives outside the physical boundaries of the classroom.