A betweenness axiom states that if A and B are equally good then a mixture of A and B is equally good as well. This note demonstrates that the violations of the betweenness axiom documented in several experimental studies can be alternatively attributed to the effect of random errors.
In the present allocation of resources in healthcare, preferences of consumers as the ultimate financiers of healthcare services are judged to be of little relevance. This state of affairs is being challenged because the past decade has seen great progress in the measurement of preferences, or more precisely, willingness-to-pay (WTP) as applied to healthcare services. This article reports evidence on WTP of the Swiss population with regard to three hypothetical modifications of the drug benefit to be covered by social health insurance: delaying access to the most recent therapeutic innovations (among them, drugs) by two years in exchange for a reduction of the monthly premium; substituting original preparations by generics, again in return for a lowered premium; and the exclusion of preparations for the treatment of minor complaints from the drug benefit. Using discrete-choice experiments, WTP and its determinants are estimated. Average WTP for avoiding such a delay (which acts across the board) is much higher than for eschewing the exclusive use of generics (which are claimed to be largely equivalent to the original) or the retention of 'unimportant' drugs in the list of benefits – a rating predicted by economic theory. In addition, a great deal of preference heterogeneity between the French-speaking minority and the German-speaking majority was found, pointing to considerable efficiency losses caused by uniformity of social health insurance.
There is growing interest in discrete-choice experiment (DCE) as a method to elicit consumers' preferences in the health care sector. Increasingly this method is used to determine willingness to pay (WTP) for health-related goods. However, its external validity in the health care domain has not been investigated until now. This paper examines the external validity of DCE concerning the reduction of a health risk. Convergent validity is examined by comparing the value of a statistical life with other preference elicitation techniques, such as revealed preference. Criterion validity is shown by comparing WTP values derived from stated choices in the experiment with those derived from actual choices made by the same individuals. Both tests provide strong evidence in favour of external validity of the DCE method.
A joint Wharton School–World Bank conference called attention to the high proportions of medical care spending paid out of pocket in most developing countries. One of the reasons for this, attendees said, is the problem in such economies of generating high tax revenues in a nondistortive way. Since people are paying out of pocket, they should be able to afford some private insurance that can spread the risk of above-average out-of-pocket payments. The potential efficiency gains from greater use of voluntary private insurance seem large, but there are a number of possible impediments to the emergence of such insurance.
We consider a simple class of dynamic games. A continuum of players chooses between two actions (“locations”) in each period; per-period payoffs depend positively on the number of players choosing the same action. The resulting dynamics are investigated. If one location receives a favorable shock, the effects of the strength of externalities and the heterogeneity of the population on the extent of adjustment may be non-monotone and discontinuous, due to two competing effects. With stronger externalities (lower heterogeneity), less players move initially, but more players follow once the process has gained momentum.
We consider a three-location duopoly model such that (i) firms choose production and innovation locations before (Bertrand) competition takes place and (ii) there are internal and external knowledge spillovers. We show: (1) agglomerations where firms earn negative profits may exist when there are both external and internal knowledge spillovers; (2) greater external spillovers do not necessarily favor agglomeration; (3) decreasing communication costs tend to favor agglomeration; (4) there are exactly two types of agglomeration equilibria: either both firms innovate in the agglomeration, or there is an innovator and an imitator; and (5) if there is a location where both firms produce, then innovation must take place in this location.
Si stanno sempre più diffondendo forme di regolamentazione che promuovono alternative di managed care nell’ambito delle assicurazioni sanitarie. In questo lavoro viene riportato un esperimento che mira a determinare l’ammontare della compensazione richiesta dalla popolazione svizzera
(in termini di riduzione del premio) quale indennizzo per l’introduzione di restrizioni di tipo managed care nell’offerta di assistenza sanitaria. L’esperimento evidenzia come restrizioni concernenti la scelta
del medico richiederebbero un indennizzo medio superiore a un terzo del premio, mentre la sostituzione di farmaci di marca con generici richiederebbe un indennizzo piuttosto contenuto. La marcata eterogeneità delle preferenze costituisce un argomento a sfavore di una regolamentazione che punti a imporre contratti assicurativi uniformi nell’ambito del sistema sanitario svizzero di assicurazione sociale.
Increasing financial disparity and spiralling wages in European football have triggered a debate about the introduction of salary caps. This paper provides a theoretical model of a team sports leagues and studies the welfare effect of salary caps. It shows that salary caps will increase competitive balance and decrease overall salary payments within the league. The resulting effect on social welfare is counter-intuitive and depends on the preference of fans for aggregate talent and for competitive balance. A salary cap that binds only for large market clubs will increase social welfare if fans prefer aggregate talent despite the fact that the salary cap will result in lower aggregate talent. If fans prefer competitive balance, on the other hand, any binding salary cap will reduce social welfare.
We study whether the effects on registered manufacturing output of dismantling the License Raj – a system of central controls regulating entry and productionnactivity in this sector – vary across Indian states with different labor market regulations. The effects are found to be unequal across Indian states with differentnlabor market regulations. In particular, following delicensing, industries locatednin states with proemployer labor market institutions grew more quickly than thosenin proworker environments.
Applied researchers often test for the difference of the Sharpe ratios of two investmentnstrategies. A very popular tool to this end is the test of Jobson and Korkie (1981), whichnhas been corrected by Memmel (2003). Unfortunately, this test is not valid when returnsnhave tails heavier than the normal distribution or are of time series nature. Instead, wenpropose the use of robust inference methods. In particular, we suggest to construct a studentized time series bootstrap confidence interval for the difference of the Sharpe ratios and to declare the two ratios different if zero is not contained in the obtained interval. This approach has the advantage that one can simply resample from the observed data as opposed to some null-restricted data. A simulation study demonstrates the improved finite sample performance compared to existing methods. In addition, two applications to real data are provided.
