Paying for Performance in Hospitals

A frequent form of pay-for-performance programs increase reimbursement for all services by a certain percentage of the baseline price. We examine how such a ?bonus-for-quality? reimbursement scheme a¤ects the wage contract given to physicians by the hospital management. To this end, we determine the bonus inducing hospitals to incentivize their physicians to meet the quality standard. Additionally, we show that the health care payer has to complement the bonus with a (sometimes negative) block grant. We conclude the paper relating the role of the block grant to recent experiences in health care market.Paying-for-Performance; Quality; Hospital Financing

The Inefficiency of Market Transparency – A Model with Endogenous Entry

Including the entry decision in a Bertrand model with imperfectly informed consumers, we introduce a trade-off at the level of social welfare. On the one hand, market transparency is beneficial when the number of firms is exogenously given. On the other, a higher degree of market transparency implies lower profits and hence makes it less attractive to enter the market in the first place. It turns out that the second effect dominates: too much market transparency has a detrimental effect on consumer surplus and on social welfare.Market transparency; endogenous entry; homogenous products

Paying for Performance in Hospitals

A frequent form of pay-for-performance programs increase reimbursement for all services by a certain percentage of the baseline price. We examine how such a “bonus-for-quality” reimbursement scheme affects the wage contract given to physicians by the hospital management. To this end, we determine the bonus inducing hospitals to incentivize their physicians to meet the quality standard. Additionally, we show that the health care payer has to complement the bonus with a (sometimes negative) block grant. We conclude the paper relating the role of the block grant to recent experiences in the American health care market.Paying-for-Performance; Quality; Hospital Financing

Equilibrium selection in supermodular games with mean payoff technologies

We examine an evolutionary model of equilibrium selection, where all individuals interact with each other, recurrently playing a strictly supermodular game. Individuals play (myopic) best responses to the current population profile, occa- sionally they pick an arbitrary strategy at random. To address the robustness of equilibrium selection in this simultaneous play scenario, we investigate whether different best-response approximations can lead to different long run equilibria.equilibrium selection; supermodular games; simultaneous play; best-response approximation

Imitators and Optimizers in a Changing Environment

We analyze the dynamic interaction between imitation and myopic optimization in an environment of changing marginal payoffs. Focusing on finite irreducible environments, we unfold a trade-off between the degree of interaction and the size of environmental shocks. The optimizer outperforms the imitator if interaction is weak or if shocks are large. We use the example of Cournot duopoly to give economic meaning to this condition. To establish our main result, we rely on continuous state space Markov theory. In particular, it turns out that introducing a stochastic environment with finitely many states suffices to make an otherwise deterministic process ergodic.imitation; optimization; evolution; heterogeneous learning rules; changing environments

Evolutionary Rent-Seeking

Tullock’s analysis of rent-seeking is reconsidered from an evolutionary point of view. We show that evolutionarily stable behavior in a rent-seeking contest differs from efficient rent-seeking behavior in a Nash equilibrium. We explore that implications of evolutionary stability for rent-seeking behavior and relate them to the well examined Nash equilibrium behavior. A most interesting result is an overdissipation law, which holds in evolutionary equilibrium.

Taxation and market power

"We analyze the incidence and welfare effects of unit sales taxes in experimental monopoly and Bertrand markets. We find, in line with economic theory, that firms with no market power are able to shift a high share of a tax burden on to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers as the presence of human buyers constrains the pricing behavior of a monopolist." (author's abstract)"Dieser Artikel untersucht Inzidenz- und Wohlfahrtseffekte einer Mengensteuer in experimentellen Monopol- und Bertrand-Märkten. Im Einklang mit der ökonomischen Theorie sind Firmen ohne Marktmacht in der Lage, einen großen Anteil der Last einer Steuererhöhung an die Konsumenten weiterzugeben. Dies gilt unabhängig davon, ob die Käufer simuliert sind oder die Kaufentscheidungen durch reale Käufer getroffen werden. In Monopolmärkten trägt der Monopolist einen großen Anteil der Last einer Steuererhöhung. Werden die Kaufentscheidungen durch reale Käufer getroffen, ist dieser Anteil jedoch kleiner als mit simulierten Käufern, da reale Käufer im Experiment das Preissetzungsverhalten des Monopolisten einschränken." (Autorenreferat