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

Multitasking, Quality and Pay for Performance

We present a model of optimal contracting between a purchaser and a provider of health services when quality has two dimensions. We assume that one dimension of quality is veri?able (dimension 1) and one dimension is not verifiable (dimension 2). We show that the power of the incentive scheme for the verifiable dimension depends critically on the extent to which quality 1 increases or decreases the provider's marginal disutility and the patients' marginal benefit from quality 2 (i.e. substitutability or complementarity). Our main result is that under some circumstances a high-powered incentive scheme can be optimal even when the two quality dimensions are substitutes.quality; altruism; pay for performance.

Distorted Performance Measures and Dynamic Incentives

Incentive contracts must typically be based on performance measures that do not exactly match agents’ true contribution to principals’ objectives. Such misalignment may impose difficulties for effective incentive design. We analyze to what extent implicit dynamic incentives such as career concerns and ratchet effects alleviate or aggravate these problems. Our analysis demonstrates that the interplay between distorted performance measures and implicit incentives implies that career and ratchet effects have real effects, that stronger ratchet effects or more distortion may increase optimal monetary incentives, and that bureaucratic promotion rules may be optimal.Search; Learning; Information and Knowledge; Communication; Belief; Compensation Packages; Payment Methods; Labor Management.

Centralized or decentralized? A case study of Norwegian hospital reform

In recent years, decentralization of financial and political power has been perceived as a useful means to improve outcomes of the health care sector. Such reforms are often a result of fashion, rather than being based on knowledge of “what works”. If decentralization is the favored strategy in health care, studies of countries that go against the current trend will be of interest and importance as they provide information about the potential drawbacks of decentralization. In Norway, specialized health care has recently been recentralized. In this paper, we review some of the evidence now available on its economic effects. The most striking observation is that recentralization did not affect the variables related to cost containment and soft budgeting.Health care system; decentralization; recentralization; Norway.

Development of Voluntary Private Health Insurance in Nordic Countries - An Exploratory Study on Country-specific Contextual Factors

The Nordic countries are healthcare systems with tax-based financing and ambitions for universal access to comprehensive services. This implies that distribution of healthcare resources should be based on individual needs, not on the ability to pay. Despite this ideological orientation, significant expansion in voluntary private health insurance (VPHI) contracts has occurred in recent decades. The development and role of VPHIs are different across the Nordic countries. Complementary VPHI plays a significant role in Denmark and in Finland. Supplementary VPHI is prominent in Norway and Sweden. The aim of this paper is to explore drivers behind the developments of the VPHI markets in the Nordic countries. We analyze the developments in terms of the following aspects: the performance of the statutory system (real or perceived), lack of coverage in certain areas of healthcare, governmental interventions or inability to reform the system, policy trends and the general socio-cultural environment, and policy responses to voting behavior or lobbying by certain interest groups. It seems that the early developments in VPHI markets have been an answer to the gaps in the national health systems created by institutional contexts, political decisions, and cultural interpretations on the functioning of the system. However, once the market is created it introduces new dynamics that have less to do with gaps and inflexibilities and more with cultural factors

Distorted performance measures and dynamic incentives

Incentive contracts must typically be based on performance measures that do not exactly match agents' true contribution to principals' objectives. Such misalignment may impose difficulties for effective incentive design. We analyze to what extent implicit dynamic incentives such as career concerns and ratchet effects alleviate or aggravate these problems. Our analysis demonstrates that the interplay between distorted performance measures and implicit incentives implies that career and ratchet effects have real effects, that career and monetary incentives may be complements, and that stronger ratchet effects or more distortion may increase optimal monetary incentives

Career concerns, monetary incentives and job design

We study optimal incentive contracts when commitments are limited, and agents have multiple tasks and career concerns. The agent career concerns are determined by the outside market. We show that the principal might want to give strongest explicit incentives for agents far from retirement to account for the fact that career concerns might induce behavior in conflict with the principal’s preferences. Furthermore, we show that maximized welfare might be decreasing in the strength of the career concerns, that optimal incentives can be positively correlated with various measures of uncertainty, and that career incentives have strong implications for optimal job design

Is there a demand response by patients in primary care?

We test whether a demand response by patients exists in the Norwegian primary care sector. In Norway, physicians are remunerated either by salary or by incentive contract, and we have access to a large data survey that allows us to study the relationship between consumer satisfaction with primary physician services and the way physicians are paid. In addition, we can identify areas (municipalities) where market demand for primary physicians’ services is responsive to effort. When a demand response exists, we expect that patients benefit is higher and that patients are more satisfied when visiting a contract physician. As expected, we find no significant effects of the proportion of salary physicians on reported patient satisfaction in municipalities where market demand is nonresponsive to physicians’ choice of effort. In municipalities with responsive market demand, we find a negative association between the proportion of salary physicians and patients’ satisfaction with their physician