Do Managers with Limited Liability Take More Risky Decisions? An Information Acquisition Model

Risk-neutral individuals take more risky decisions when they have limited liability. Risk-neutral managers may not when acting as agents under contract and taking costly actions to acquire information before taking decisions. Limited liability makes it optimal to increase the reward for outcomes relatively more likely to arise from desirable than from undesirable actions. The resulting decisions may be less, rather than more, risky. Making a decision after acquiring information provides an additional reason to those in the classic principal-agent literature for using contracts with pay increasing in the return. Further results on the form of contracts are also derived.managers, risky decisions, limited liability, principal-agent contracts, asymmetric information

Supplier Discretion over Provision: Theory and an Application to Medical Care

Suppliers who are better informed than purchasers, such as physicians treating insured patients, often have discretion over what to provide. This paper shows how, when the purchaser observes what is supplied but can observe neither recipient type nor the actual cost incurred, optimal provision differs from what would be efficient if the purchaser had full information, whether or not the supplier can extract informational rent. The analysis is applied to, among other things, data on tests for coronary artery disease and to Medicare diagnosis-related groups defined by the treatment given, not just the diagnosis, illustrating the biases in provision that result.supplier discretion, procurement, public provision, diagnosis-related groups, medicare, prospective payment, cost-effectiveness

Health Service Gatekeepers

Incentive contracts for gatekeepers who control patient access to specialist medical services provide too weak incentives to investigate cost further when expected cost of treatment is greater than benefit. Making gatekeepers residual claimants with a fixed fee from which treat-ment costs must be met (as with full insurers who are themselves gatekeepers) provides too strong incentives when expected cost is less than benefit. Giving patients the choice between a gatekeeper with an incentive contract and one without is unstable. With one scenario, pa- tients always prefer the latter. With another, patients have incentives to acquire information that makes incentive contracts ineffective.gatekeepers, patient referrals, general practitioners, fundholding, medical insurance, incentive contracts

General training by firms, apprentice contracts, and public policy

Workers will not pay for general on-the-job training if contracts are not enforceable. Firms may if there are mobility frictions. Private information about worker productivities, however, prevents workers who quit receiving their marginal products elsewhere. Their new employers then receive external benefits from their training. Training firms increase profits by offering apprenticeships committing them to high wages for trainees retained on completion. At those wages, only good workers are retained, which signals their productivity and reduces the external benefits if they subsequently quit. Regulation of apprenticeship length (a historically important feature) can enhance efficiency, as can appropriate subsidies.

Competition in public service provision: the role of not-for-profit providers

With public services such as health and education, it is not straightforward for consumers to assess the quality of provision. Many such services are provided by monopoly not-for-profit providers and there is concern that for-profit providers may increase profit at the expense of quality. This paper explores the implications of entry by for-profit providers when there is unobserved quality. The model generates three key policy-relevant insights. First, by developing a novel approach to competition between different organizational forms, it frames the relevant trade-offs precisely. Second, it shows the value of keeping an incumbent not-for-profit as an active provider. Third, it characterizes the optimal payment (or voucher value) to an entrant for each consumer who switches in a way that can be applied empirically

The Impossibility of a Perfectly Competitive Labor Market

Using the institutional theory of transaction cost, I demonstrate that the assumptions of the competitive labor market model are internally contradictory and lead to the conclusion that on purely theoretical grounds a perfectly competitive labor market is a logical impossibility. By extension, the familiar diagram of wage determination by supply and demand is also a logical impossibility and the neoclassical labor demand curve is not a well-defined construct. The reason is that the perfectly competitive market model presumes zero transaction cost and with zero transaction cost all labor is hired as independent contractors, implying multi-person firms, the employment relationship, and labor market disappear. With positive transaction cost, on the other hand, employment contracts are incomplete and the labor supply curve to the firm is upward sloping, again causing the labor demand curve to be ill-defined. As a result, theory suggests that wage rates are always and everywhere an amalgam of an administered and bargained price. Working Paper 06-0

Association of a dietary inflammatory index with cardiometabolic, endocrine, liver, renal and bones biomarkers: cross-sectional analysis of the UK Biobank study

Background and Aims: Research into the relationship between an Energy-adjusted Diet-Inflammatory Index (E-DII) and a wider health-related biomarkers profile is limited. Much of the existing evidence centers on traditional metabolic biomarkers in populations with chronic diseases, with scarce data on healthy individuals. Thus, this study aims to investigate the association between an E-DII score and 30 biomarkers spanning metabolic health, endocrine, bone health, liver function, cardiovascular, and renal functions, in healthy individuals. Methods and Results: 66,978 healthy UK Biobank participants, the overall mean age was 55.3 (7.9) years were included in this cross-sectional study. E-DII scores, based on 18 food parameters, were categorized as anti-inflammatory (E-DII <-1), neutral (-1 to 1), and pro-inflammatory (>1). Regression analyses, adjusted for confounding factors, were conducted to investigate the association of 30 biomarkers with E-DII. Compared to those with an anti-inflammatory diet, individuals with a pro-inflammatory diet had increased levels of 16 biomarkers, including six cardiometabolic, five liver, and four renal markers. The concentration difference ranged from 0.27 SD for creatinine to 0.03 SD for total cholesterol. Conversely, those on a pro-inflammatory diet had decreased concentrations in six biomarkers, including two for endocrine and cardiometabolic. The association range varied from -0.04 for IGF-1 to -0.23 for SHBG. Conclusion: This study highlighted that a pro-inflammatory diet was associated with an adverse profile of biomarkers linked to cardiometabolic health, endocrine, liver function, and renal health

Diet-associated inflammation modulates inflammation and WNT signaling in the rectal mucosa, and the response to supplementation with dietary fiber

Inflammation drives colorectal cancer development, and colorectal cancer risk is influenced by dietary factors, including dietary fiber. Hyperactive WNT signaling occurs in colorectal cancer and may regulate inflammation. This study investigated (i) relationships between the inflammatory potential of diet, assessed using the Energy-adjusted Dietary Inflammatory Index (E-DII), and markers of WNT signaling, and (ii) whether DII status modulated the response to supplementation with two types of dietary fiber. Seventy-five healthy participants were supplemented with resistant starch and/or polydextrose (PD) or placebo for 50 days. Rectal biopsies were collected before and after intervention and used to assess WNT pathway gene expression and crypt cell proliferation. E-DII scores were calculated from food frequency questionnaire data. High-sensitivity C-reactive protein (hsCRP) and fecal calprotectin concentrations were quantified. hsCRP concentration was significantly greater in participants with higher E-DII scores [least square means (LSM) 4.7 vs. 2.4 mg/L, P = 0.03]. Baseline E-DII score correlated with FOSL1 (b = 0.503, P = 0.003) and WNT11 (b = 0.472, P = 0.006) expression, after adjusting for age, gender, body mass index, endoscopy procedure, and smoking status. WNT11 expression was more than 2-fold greater in individuals with higher E-DII scores (LSM 0.131 vs. 0.059, P = 0.002). Baseline E-DII modulated the effects of PD supplementation on FOSL1 expression (P = 0.04). More proinflammatory diets were associated with altered WNT signaling and appeared to modulate the effects of PD supplementation on expression of FOSL1. This is the first study to investigate relationships between the E-DII and molecular markers of WNT signaling in rectal tissue of healthy individuals