Some general results on the metric rationalization for social decision rules

The purpose of this paper is twofold. First, to provide a transparent characterization of the family of metrizable social decision rules. Second, to provide the necessary and sufficient conditions for a reasonable metric rationalization. Theorem 1 establishes that the class of metrizable social decision rules is uniquely characterized by a variant of the well-known Pareto condition. Theorem 2 establishes that positional rules can be characterized in terms of a special class of additively decomposable quasi-metric rationalizations. Theorem 3 characterizes strong positional rules in terms of reasonable metric rationalizations.     

Predation,Protection, and Accumulation: Endogenous Property Rights in an Overlapping Generations Growth Model

We study a simple growth model with overlapping generations in which property rights are insecure. Insecurity of property rights leads to predation. Due to predation some of the resources are used for protection purposes. Both predation and protection remove resources from the accumulation process. In the model individuals allocate their labor between working for firms and appropriating output from them. Firms allocate their capital between production and protection. Without government, the model generates a unique but inefficient equilibrium. We show that in this equilibrium the level of output is increasing in the rate of effectiveness of protection, the relative utility of honesty, and the discount rate. Further, the equilibrium level of output is dynamically inefficient. We then extend the model to include a government as the sole provider of the public good “protection”. Protection is assumed to be financed by a capital tax imposed on firms. The model then yields multiple equilibria, with both a stable high-protection low-predation equilibrium, and a stable low-protection high-predation equilibrium. Which equilibrium a country is most likely to achieve, and how difficult it is for a country to move to the more desirable low-predation high-protection equilibrium, depend crucially on the parameters of the model describing the economy’s institutional structure. Hence, the results of the model support the emphasis placed by the World Bank on the importance for growth of strengthening institutional structures in developing countries.JEL Code: D23, D90, O41     

Proportional taxation: Nonexistence of stable structures in an economy with a public good

Guesnerie and Oddou [J. Econom. Theory25 (1981), 67–91] raised the open question whether an economy, in which the production of a public good is financed via proportional taxation, has a stable structure. By means of the first example a negative answer to this question is provided. The second example shows that a stable structure may fail to exist even if all the individuals have the same initial endowments in private good.     

The Costs of Implementing the Majority Principle: The Golden Voting Rule

In a context of constitutional choice of a voting rule, this paper presents an economic analysis of scoring rules that identifies the golden voting rule under the impartial culture assumption. This golden rule depends on the weights β and (1−β) assigned to two types of costs: the cost of majority decisiveness (‘tyranny’) and the cost of the ‘erosion’ in the majority principle. Our first main result establishes that in voting contexts where the number of voters n is typically considerably larger than the number of candidates k, the golden voting rule is the inverse plurality rule for almost any positive β. Irrespective of n and k, the golden voting rule is the inverse plurality rule if β ≥ 1/2 .. This hitherto almost unnoticed rule outperforms any other scoring rule in eliminating majority decisiveness. The golden voting rule is, however, the plurality rule, the most widely used voting rule that does not allow even the slightest ‘erosion’ in the majority principle, when β=0. Our second main result establishes that for sufficiently “small size” voting bodies, the set of potential golden rules consists at most of just three rules: the plurality rule, the Borda rule and the inverse plurality rule. On the one hand, this finding provides a new rationalization to the central role the former two rules play in practice and in the voting theory literature. On the other hand, it provides further support to the inverse plurality rule; not only that it is the golden rule in voting contexts, it also belongs, together with the plurality rule and the Borda method of counts, to the “exclusive” set of potential golden voting rules in small committees. We are indebted to Jim Buchanan, Amichai Glazer, Noa Nitzan, Ken Shepsle, and an anonymous referee for their useful comments.     

Targeting interventions to high-risk populations: Benefits and costs

Targeting prevention interventions to high-risk populations may increase intervention benefits, but identifying and/or finding the high-risk populations may increase intervention costs. We explore the costs and benefits of targeting in the context of human immunodeficiency virus (HIV) prevention in high-risk injection drug users (IDUs). Focusing interventions on such a population should maximize the number of HIV infections averted. Recruiting high-risk IDUs for such interventions, however, may be more difficult and costly. We base our analysis on an earlier model that determines the allocation of resources to two interventions, street outreach and methadone maintenance. The model seeks to minimize HIV incidence in a population of heterosexual IDUs and their non-injecting sex partners. We conclude that while targeting an inexpensive intervention like street outreach rarely proves to be cost-effective, even a costly targeting effort can increase cost effectiveness for an expensive, effective, narrowly focused intervention such as methadone maintenance.     

Cost per median overall survival month associated with abiraterone acetate and enzalutamide for treatment of patients with metastatic castration-resistant prostate cancer

Objective: To calculate costs per median overall survival (OS) month in chemotherapy-naïve patients with metastatic castration-resistant prostate cancer (mCRPC) treated with abiraterone acetate plus prednisone (AA?+?P) or enzalutamide. Methods: Median treatment duration and median OS data from published Phase 3 clinical trials and prescribing information were used to calculate costs per median OS month based on wholesale acquisition costs (WACs) for patients with mCRPC treated with AA?+?P or enzalutamide. Sensitivity analyses were performed to understand how variations in treatment duration and treatment-related monitoring recommendations influenced cost per median OS month. Cost-effectiveness estimates of other Phase 3 trial outcomes were also explored: cost per month of chemotherapy avoided and per median radiographic progression-free survival (rPFS) month. Results: The results demonstrated that AA?+?P has a lower cost per median OS month than enzalutamide ($3231 vs 4512; 28% reduction), based on the following assumptions: median treatment duration of 14 months for AA?+?P and 18 months for enzalutamide, median OS of 34.7 months for AA?+?P and 35.3 months for enzalutamide, and WAC per 30-day supply of $8007.17 for AA?+?P vs $8847.98 for enzalutamide. Sensitivity analyses showed that accounting for recommended treatment-related monitoring costs or assuming identical treatment durations for AA?+?P and enzalutamide (18 months) resulted in costs per median OS month 8–27% lower for AA?+?P than for enzalutamide. Costs per month of chemotherapy avoided were $4448 for AA?+?P and $5688 for enzalutamide, while costs per month to achieve median rPFS were $6794 for AA?+?P and $7963 for enzalutamide. Conclusions: This cost-effectiveness analysis demonstrated that costs per median OS month, along with costs of other Phase 3 trial outcomes, were lower for AA?+?P than for enzalutamide. The findings were robust to sensitivity analyses. These results have important implications for population health decision-makers evaluating the relative value of therapies for mCRPC patients.     

Lotteries vs. All‐Pay Auctions in Fair and Biased Contests

The form of contests for a single fixed prize can be determined by a designer who maximizes the contestants' efforts. This article establishes that, under common knowledge of the two asymmetric contestants' prize valuations, a fair Tullock‐type endogenously determined lottery is always superior to an all‐pay‐auction; it yields larger expected efforts (revenues) for the contest designer. If the contest can be unfair (structural discrimination is allowed), then the designer's payoff under the optimal lottery is equal to his expected payoff under the optimal all‐pay auction.