Incomplete information and small cores in matching markets

We study Bayesian Nash equilibria of stable mechanisms in centralized matching markets under incomplete information. We show that truth-telling is a Bayesian Nash equilibrium of the revelation game induced by a common belief and a stable mechanism if and only if all the profiles in the support of the common belief have singleton cores. Our result matches the observations of Roth and Peranson (1999) in the National Resident Matching Program (NRMP) in the United States: (i) the cores of the profiles submitted to the clearinghouse are small and (ii) while truth-telling is not a dominant strategy most participants of the NRMP truthfully reveal their preferences

Efficient and stable collective choices under crowding preferences

We consider a set of agents who have to choose one alternative among a finite set of social alternatives. A final allocation is a pair given by the selected alternative and the group of its users. Agents have crowding preferences over allocations: between any pair of allocations with the same alternative, they prefer the allocation with the largest number of users. We require that a decision be efficient and stable (which guarantees free participation in the group of users and free exit from it). We propose a two-stage sequential mechanism whose unique subgame perfect equilibrium outcome is an efficient and stable allocation which also satisfies a maximal participation property. The social choice function implemented by the proposed mechanism is also anonymous and group stable

Partnership in open innovation

This paper aims at assessing the importance of the initial technological endowments when firms decide to create R&D agreements. We study a Bertrand duopoly where firms evaluate the returns of an agreement according to its length. A learning process allows us to depict a close connection between firms' technology and the possibility to achieve a positive outcome from creating an agreement. Moreover, as far as learning is modeled as an iterative process, a suitable set of initial conditions is the basic factor leading to successful ventures

Product specialization, efficiency and productivity change in the spanish insurance industry

In this paper we analyze the levels of technical efficiency and productivity growth attained by Spanish insurance companies during a period of deregulation. We compute Malmquist productivity indexes using the estimates of parametric distance function for several specialized insurance branches. In this way, we show that branch specialization matters a great deal and that firms combining two or three product lines (Health, Property-Liabilities and Life) perform better than firms operating in one insurance line exclusively. In the light of these results, we recommend that the remaining restrictions coming from the European Third Directives on the operations of multi-branch firms should be removed. Moreover, from a management point of view, it would be appropriate to encourage the creation of multi-branch insurance firms. However, in all cases, the estimated scores indicate low productivity growth (less than 2% per year) compared with a huge increase in insurance activity (premiums were multiplied by nearly 3 in a decade)

Productivity at the post : its drivers and its distribution

We study the economic, financial and distributional performance of the United States Postal Service subsequent to its 1971 reorganization. We investigate the economic sources of productivity change, (technical change, change in cost efficiency, and scale economies), and the distribution of the financial benefits of productivity change (consumers of postal services, postal employees and other resource suppliers, and residual claimants). We find improvements in technology to have been the main driver of, and diseconomies of scale to have been the main drag on, productivity change. We find labor to have been the main beneficiary, and the US Treasury and consumers of postal services the main losers, from postal reorganization

Contractual design and public-private parternships for hospitals

Recently the Portuguese Government announced the launching of public private partnerships to build hospitals with the distinctive feature that both infrastructure construction and the clinical activities management will be awarded to a private party. Accordingly there appear coordination issues that are novel in the design of PPP contracts. We explore the conditions allowing for the optimal design contracts design under several some plausible scenarios

On insurance and the cost-sharing of pharmaceutical R&D

Ramsey pricing has been proposed in the pharmaceutical industry as a principle to price discriminate among markets while allowing to recover the (fixed) R&D cost. However, such analyses neglect the presence of insurance or the fund raising costs for drug reimbursement. By incorporating these new elements, we aim at providing some building blocks towards an economic theory merging Ramsey pricing, equity concerns by governments and the strategic incentives, as governments also determine the reimbursement level in countries with a NHS-like system. This will have important implications to the application of Ramsey pricing principles to pharmaceutical products across countries

Some things couples always wanted to know about stable matchings (but were afraid to ask)

In this note we study the National Resident Matching Program (NRMP) algorithm in the US market for physicians. We report on two problems that concern the presence of couples, a feature explicitly incorporated in the new NRMP algorithm (cf. Roth and Peranson, 1999). First, we show that the new NRMP algorithm may not find an existing stable matching, even when couples' preferences are 'responsive,' i.e., when Gale and Shapley's (1962) deferred acceptance algorithm (on which the old NRMP algorithm is based) is applicable. Second, we demonstrate that the new NRMP algorithm may also be manipulated by couples acting as singles

Selecting negotiation processes with health care providers

We address the question of how a third-party payer (e.g. an insurer) decides what providers to contract with. Two different mechanisms are studied and their properties compared. A first mechanism consists in the thirdparty payer setting up a bargaining procedure with both providers. The second mechanism is the so-called "any willing provider" where the third-party payer announces a contract and every provider freely decides to sign it or not. The main finding is that the decision of the third-party payer depends on the surplus to be shared. When it is relatively high the third-party payer prefers the any willing provider system. When, on the contrary, the surplus is relatively low, the third-party payer will select a negotiated solution

On modeling transport costs

The interpretation of the loss of utility as transport costs in address models of differentiation poses a methodological difficulty. Transport costs implicitely amounts to assume that there is a good neither included in the differentiated sector nor in the composite (numeraire) good of the economy. We propose to use iceberg-type transport costs to solve this difficulty