Managerial Incentives and Capital Management

In Holmstrom (1982) an example is given, which shows that a manager’s concern for the value of his human capital will lead to a natural incongruity in risk-preferences between himself and the owners, even when no effort considerations are involved. In this paper we present a formal model of this channel of incongruity based on learning about managerial talent. We also explore the nature of an optimal incentive contract in the case where the manager may withhold but not misrepresent information about investment returns. The optimal contract is an option on the manager’s human capital value with a possible bonus for investing. The optimal investment rule accepts fewer investments than under the cost of capital — a commonly observed real world feature. Another phenomena the model helps explain is the extensive use of capital budgeting and rationing schemes in place of linear or non-linear price decentralization, which are shown to be less efficient modes of allocation

Managerial Task Assignment and Promotions.

A two-period model of managerial task assignment is developed, where the current employer has the advantage of observing the actual performanc e of the manager, while outside employers can observe only the assign ments. Optimal contracts are rigid, but the market value of managers is below actual productivity and they are promoted less than is effic ient. The author introduces the idea of managers explo iting their information to separate themselves out in the market plac e. As a consequence, the model has the appealing property of small ab ility-based wage differentials within a task, as well as large ones b etween tasks. Copyright 1988 by The Econometric Society.

Geoeconomic variations in epidemiology, ventilation management, and outcomes in invasively ventilated intensive care unit patients without acute respiratory distress syndrome: a pooled analysis of four observational studies

Background: Geoeconomic variations in epidemiology, the practice of ventilation, and outcome in invasively ventilated intensive care unit (ICU) patients without acute respiratory distress syndrome (ARDS) remain unexplored. In this analysis we aim to address these gaps using individual patient data of four large observational studies. Methods: In this pooled analysis we harmonised individual patient data from the ERICC, LUNG SAFE, PRoVENT, and PRoVENT-iMiC prospective observational studies, which were conducted from June, 2011, to December, 2018, in 534 ICUs in 54 countries. We used the 2016 World Bank classification to define two geoeconomic regions: middle-income countries (MICs) and high-income countries (HICs). ARDS was defined according to the Berlin criteria. Descriptive statistics were used to compare patients in MICs versus HICs. The primary outcome was the use of low tidal volume ventilation (LTVV) for the first 3 days of mechanical ventilation. Secondary outcomes were key ventilation parameters (tidal volume size, positive end-expiratory pressure, fraction of inspired oxygen, peak pressure, plateau pressure, driving pressure, and respiratory rate), patient characteristics, the risk for and actual development of acute respiratory distress syndrome after the first day of ventilation, duration of ventilation, ICU length of stay, and ICU mortality. Findings: Of the 7608 patients included in the original studies, this analysis included 3852 patients without ARDS, of whom 2345 were from MICs and 1507 were from HICs. Patients in MICs were younger, shorter and with a slightly lower body-mass index, more often had diabetes and active cancer, but less often chronic obstructive pulmonary disease and heart failure than patients from HICs. Sequential organ failure assessment scores were similar in MICs and HICs. Use of LTVV in MICs and HICs was comparable (42·4% vs 44·2%; absolute difference -1·69 [-9·58 to 6·11] p=0·67; data available in 3174 [82%] of 3852 patients). The median applied positive end expiratory pressure was lower in MICs than in HICs (5 [IQR 5-8] vs 6 [5-8] cm H2O; p=0·0011). ICU mortality was higher in MICs than in HICs (30·5% vs 19·9%; p=0·0004; adjusted effect 16·41% [95% CI 9·52-23·52]; p<0·0001) and was inversely associated with gross domestic product (adjusted odds ratio for a US$10 000 increase per capita 0·80 [95% CI 0·75-0·86]; p<0·0001). Interpretation: Despite similar disease severity and ventilation management, ICU mortality in patients without ARDS is higher in MICs than in HICs, with a strong association with country-level economic status