Hospital competition under pay‐for‐performance: Quality,mortality, and readmissions

Health outcomes, such as mortality and readmission rates, are commonly used as indicators of hospital quality and as a basis to design pay‐for‐performance (P4P) incentive schemes. We propose a model of hospital behavior under P4P where patients differ in severity and can choose hospital based on quality. We assume that risk‐adjustment is not fully accounted for and that unobserved dimensions of severity remain. We show that the introduction of P4P which rewards lower mortality and/or readmission rates can weaken or strengthen hospitals' incentive to provide quality. Since patients with higher severity have a different probability of exercising patient choice when quality varies, this introduces a selection bias (patient composition effect) which in turn alters quality incentives. We also show that this composition effect increases with the degree of competition. Critically, readmission rates suffer from one additional source of selection bias through mortality rates since quality affects the distribution of survived patients. This implies that the scope for counterproductive effects of P4P is larger when financial rewards are linked to readmission rates rather than mortality rates.     

The bargaining set of a large game

We study the equivalence between the Mas-Colell bargaining set and the core in the general context of TU games with a measurable space of players. In the first part of the paper, we study the problem without imposing any restriction on the class of games we consider. In the second part, we first introduce a new class of exact games, which we call thin games. For these games, we show not only that the Mas-Colell bargaining set is equal to the core, but also that it is the unique stable set in the sense of von Neumann and Morgenstern. We then study the relation between thin games, exact non-atomic market games and non-atomic convex games. Finally, by further developing “thinness” related ideas, we prove new equivalence results for a class of non-exact market games as well as a class of non-exact, non-market games.     

Why Do Companies Go Public? An Empirical Analysis

Using a large database of private firms in Italy, we analyze the determinants of initial public offerings (IPOs) by comparing the ex ante and ex post characteristics of IPOs with those of private firms. The likelihood of an IPO is increasing in the company's size and the industry's market-to-book ratio. Companies appear to go public not to finance future investments and growth, but to rebalance their accounts after high investment and growth. IPOs are also followed by lower cost of credit and increased turnover in control.     

A Note on the (Un)Pleasant Arithmetic of Fiscal Policy: The Case of Italian Public Debt

Using the simple arithmetic of government budget constraint, we perform an illustrative analysis on the Italian case, investigating the consequences on the main public finance aggregates of the adoption of a fiscal policy rule responding to past real debt/GDP ratio. Such a rule, firmly grounded in the economic analysis, would allow the reduction of Italy's outstanding stock of debt without requiring the strict adherence to the 3 per cent criterion for deficit/GDP ratio, as prescribed by SGP (Stability and Growth Pact). We perform a forecasting exercise under five alternative scenarios and analyse the details of a structural debt reduction strategy with alternative yearly step.     

The Dynamics of Household Wealth Accumulation in Italy

We examine the dynamics of wealth accumulation distribution in Italy using data drawn from the Survey of Household Income and Wealth, a representative survey of the Italian population conducted by the Bank of Italy. We compare survey data with National Accounts data and discuss sample representativeness, attrition and measurement issues. We then look at wealth inequality (the cross‐sectional dispersion of wealth) and wealth mobility (individual transitions across the wealth distribution) and examine the age profile of wealth using repeated cross‐sectional data. Finally, we consider various explanations for the pattern of wealth accumulation in Italy, focusing on retirement, bequests, income risk, health shocks and credit market imperfections.     

The role of trust in the 2008 financial crisis

Financial transactions require trust. This paper analyzes the role of trust in the context of the 2008 financial crisis. In order to find a role for trust, we need to find a role for trust in a standard economic model which differs from the rational expectation of the equilibrium outcome. It is argued that trust dropped dramatically in the Fall of 2008. The consequences and effects of this drop in trust are discussed.     

Hospital Competition and Quality with Regulated Prices*

We analyse the effect of competition on quality in hospital markets with regulated prices, considering the effect of both introducing competition (monopoly versus competition) and increasing competition through either lower transportation costs (increased substitutability) or a higher number of hospitals. With semi‐altruistic providers and a fairly general cost structure, we show that the relationship between competition and quality is generally ambiguous. In contrast to the received body of theoretical literature, this is consistent with, and potentially explains, the mixed empirical evidence.