Do physician incentives affect hospital choice? A progress report

The US health reforms of March 2010 introduced new provisions for physicians providing Medicare and Medicaid services to be given financial incentives to control costs. Physician payment mechanisms generating similar incentives are currently used by some health maintenance organizations in California. We describe an ongoing research project in which we investigate physician responses to these payment schemes. The question is whether patients whose physicians have incentives to control hospital costs are admitted to lower-priced hospitals than other patients, all else equal. We provide an initial analysis of California hospital discharge data from 2003, documenting evidence consistent with this hypothesis.     

Measuring knowledge production of an agricultural research system

Agricultural research that increases knowledge is an important component of agricultural productivity and development. This paper focuses on understanding and formulating the interactions among factors involved in the knowledge production process. A conceptual mode of research input-output relationships is developed based on the existing literature. These relationships are estimated based on cross-sectional time-series data for the public research system in Israel. Research resources (inputs) such as direct cost and senior scientific manpower were found to extend knowledge production, while resources such as junior researchers and technicians were found to be nonsignificant. Use of the estimated functions for forecasting and control of agricultural development is also illustrated.     

Duality theory for robust utility maximisation

In this paper, we present a duality theory for the robust utility maximisation problem in continuous time for utility functions defined on the positive real line. Our results are inspired by – and can be seen as the robust analogues of – the seminal work of Kramkov and Schachermayer (Ann. Appl. Probab. 9:904–950, 1999). Namely, we show that if the set of attainable trading outcomes and the set of pricing measures satisfy a bipolar relation, then the utility maximisation problem is in duality with a conjugate problem. We further discuss the existence of optimal trading strategies. In particular, our general results include the case of logarithmic and power utility, and they apply to drift and volatility uncertainty.

     

On the Samuelson–Etula Master Function and the capital controversy

Abstract

The paper addresses the ambiguity that surrounds the conception of capital and its role in neoclassical price-and-distribution theory. The difficulties encountered in the various attempts to define the marginal product either of capital or of a capital good are recalled and the conclusion is drawn that neither concept appears theoretically sound. This historical reconstruction is combined with critical discussion of the recent attempt by Paul Samuelson to determine income distribution by means of the “Master Function”, a device previously developed and presented by Samuelson himself with Erkko Etula, and its “non-neoclassical” marginal products. Rather than the existence of a continuum of alternative technical possibilities, this construction assumes the simultaneous use of a discrete number of methods of production for the same commodity. Even though each technique employs the inputs in fixed proportions, the coexistence of various techniques permits the full employment of an arbitrarily given vector of input endowments. As is shown here, however, the coexistence of methods required for the differentiability of the Master Function can take place, if heterogenous capital goods are used in production, neither in the case with stationary relative prices nor in the non-stationary Arrow–Debreu framework.     

Cooperative Management of Groundwater Resources in the Presence of Environmental Externalities

This paper investigates how cooperation among users can achieve a better management of groundwater in the presence of environmental externalities. Cooperation allows users to internalize the damages caused by their activities and reduce extractions. The paper develops a game theoretical framework to assess the value of cooperation in an aquifer that is divided into three sub-aquifers that are being overly exploited. Two types of externalities are modeled: first, water extractions in each sub-aquifer impact water levels in neighboring sub-aquifers (extraction externality). Second, the three sub-aquifers are also connected to an ecosystem and thus decisions in each sub-aquifer affect the health of the ecosystem (environmental externality). A cooperative game theory model is applied. The model empirically shows how the uncontrolled extractions in each sub-aquifer affects neighboring groundwater users but also cause severe impacts to the linked ecosystem. The model is tested empirically in one of the most important aquifers in Spain, the Eastern la Mancha aquifer. The results illustrate how both extraction and environmental externalities interact in affecting the likelihood of cooperation among the users. The paper estimates the value of cooperation and its stability with and without the environmental externality.     

Why do merger premiums vary across industries and over time?

We identify time-varying industry and macroeconomic factors that explain the observed variation in takeover premiums over time. Results support our hypotheses that some industry and economic factors can increase the growth prospects in an industry, which boosts expected synergies and/or demand for the target firm, and therefore increases the merger premiums. Merger premiums are higher when the target's corresponding industry experiences higher growth, has more research and development (a proxy for expected growth), and has less dispersion in performance among firms within the industry. Merger premiums are also positively related to capital liquidity, which can enhance economic growth and competition for target firms, and positively related to volatility in economic growth, which affect merger waves and the demand for target firms over time.     

THE REGULATION OF MORTGAGE SERVICING: LESSONS FROM THE FINANCIAL CRISIS

Pivotal litigation against the largest subprime mortgage servicer in the United States provides lessons about the appropriate regulation of mortgage servicing and adds to research about the causes of the financial crisis. Mortgage servicing is essential to the functioning of the financial system so servicers must be held to a high standard. The litigation revealed egregious practices but was settled quickly for a nominal amount and provided the servicer a very broad release of liability, allowing it to expand without correcting serious problems, and created significant wealth gains for the parent firm. Regulatory authority should not be split between agencies. (JEL G28, G21, K40)     

A computational framework for analyzing dynamic auctions: The market impact of information sharing

This article develops a computational framework to analyze dynamic auctions and uses it to investigate the impact of information sharing among bidders. We show that allowing for the dynamics implicit in many auction environments enables the emergence of equilibrium states that can only be reached when firms are responding to dynamic incentives. The impact of information sharing depends on the extent of dynamics and provides support for the claim that information sharing, even of strategically important data, need not be welfare reducing. Our methodological contribution is to show how to adapt the experience-based equilibrium concept to a dynamic auction environment and to provide an implementable boundary-consistency condition that mitigates the extent of multiple equilibria.     

Labor–Management Partnership and Employee Voice: Evidence from the Healthcare Setting

This paper examines the relationship between labor–management partnership (LMP) and employee voice in the healthcare setting. We argue that the ability of LMP to deliver gains to employees is contingent on the quality of the procedural infrastructure on which it is established. We maintain that the quality of LMP processes influences employee trust in their employer and perceptions of union effectiveness and that these perceptions, in turn, are related to employee patient‐care voice.