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

Efficient specific investments, incomplete contracts, and the role of market alternatives

Investment

Status after early retirement the effects of social network and activity level on body age and health

The present study explored the relationship of general health and body age (measured by the Adult Growth Examination, Morgan, 1981) with leisure activity, social network and life events, for 38 noncommissioned officers; retiring in 1981 or 1976. Retirees from 1981 were expected to have experienced more change in health, leisure activity, and social network, life events and to have poorer health and body age scores. Importance and satisfaction of relationships, few life changes, high frequency and enjoyment of leisure activity were expected to be related to perceived good health and low body ages. Perceived good health and low body ages were expected to have fewer changes in leisure activity and social network and fewer life events than high body ages and poor health. Those in good health were expected to have fewer contacts with social services and health providers than those in poor health. The 1981 group experienced significantly more change in social network and activity level than the 1976 group. Body age was found to be unrelated to all other variables for the present sample. General health was related to life events, activity frequency and enjoyment, and social network. However, the relationship between general health and importance and satisfaction of relationships was more complex than predicted, and requires further study. The possible impact of self-selecting characteristics of the participants was discussed. The present study failed to find a group of people with significantly older body ages which may account for the failure of body age to be related to the other variables. Methodological problems were noted and future research suggested

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.

Investigation of apoptosis by conditional gene expression

Apoptosis is a form of cell death that occurs in individual cells in normal and diseased tissues. It occurs as a consequence of activation of a program of molecular events that results in the dismantlement and clearance of cells, often without induction of an inflammatory response. Many of the molecular components that regulate and execute apoptosis have been identified. Some of these regulators are, or are related to, genes that are altered in oplasia, such as c- myc,p53 and Bcl -2. The effector molecules belong to a class of cysteine proteases, known the ICE -like proteases (e.g. Nedd2). Whilst the known components can have identifiable activity in apoptosis id (or) cell cycle control, it has been suggested that they interact to control apoptosis. Further, it is not known nv the regulatory molecules interact upon downstream effectors to control apoptosis induction. Until recently, has not been possible to examine the role of apoptosis genes in combination other than by combinatorial mouse lockouts - a very time- consuming and expensive exercise. It was therefore decided to direct the expression of , veral apoptosis -related genes (namely c -myc, p53, p21 WAF /CIP, and Nedd2) in tissue culture in order to .ovide useful tools to answer questions about the role of such genes in the control of apoptosis.Owing to the limitations of existing conventional expression technology, where test genes are constitutively ,overexpressed from a strong viral promoter often in transient expression assays, use was made of conditional inigenes: 1) A temperature- sensitive (ts) murine p53 (p53va1135) was employed to investigate the sensitivity of :tivated c- Ha -ras- transformed rat embryo fibroblasts (Clone 6) to DNA -damage induced by the genotoxic iemotherapeutic drugs etoposide and bleomycin; 2) An oestrogen -regulable c- myc -oestrogen receptor hormone nding domain fusion protein (myc -ER) was used in conjunction with p53va1135 in order to investigate whether ,rced expression of phenotypically wild -type p53 was sufficient to trigger apoptosis by c -myc in Clone 6 and at -1 fibroblasts; and 3) Vectors were constructed that contain apoptosis genes under the control of semi - rnthetic promoters based upon the inducible E. coli lac operator- repressor system or a promoter containing east Gal-4 binding sites inducible by a tamoxifen -sensitive VP16GaElen chimaeric trans- activator protein.Results showed that: 1) Expression of ts p53 at the permissive temperature protected Clone 6 cells from rtotoxic drug- induced apoptosis, probably by enforcing a cell cycle arrest in G1. 2) Co- expression of myc -ER id ts p53 yielded no stable cell lines probably due to biologically significant basal activation of both p53val 135 id myc -ER under the culture conditions used. This is consistent with a co- operative role for c -myc and p53 in apoptosis triggering. 3) Control of expression in Rat -1 cells of the ICE -like protease Nedd2 (the mouse 3mologue of human ICH- I) by the VP I6GalER`m system was tight enough to allow development of stably - ansfected cells, which upon induction with 4- hydroxytamoxifen, rapidly underwent apoptosis. In contrast, ansfections with a LacI- repressible Nedd2 expression vector could not produce repressed stable expression vets that were low enough to be compatible with colony survival following selection in tissue culture.In this work, conditional expression technology was applied to the problem of control of apoptosis and shows tat gene expression experiments that increase the susceptibility of cells to apoptosis can be carried out in a :gulated fashion. Using this approach, a cytoprotective role of wild type p53 -mediated growth arrest was discovered that was abrogated by c -myc. In addition, cell lines were developed that are suitable for the biochemical characterisation of the action of Nedd2 protease

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 impact of the injection protocol on an impurity's stationary state

We examine stationary state properties of an impurity particle injected into a one-dimensional quantum gas. We show that the value of the impurity's end velocity lies between zero and the speed of sound in the gas, and is determined by the injection protocol. This way, the impurity's constant motion is a dynamically emergent phenomenon whose description goes beyond accounting for the kinematic constraints of Landau approach to superfluidity. We provide exact analytic results in the thermodynamic limit, and perform finite-size numerical simulations to demonstrate that the predicted phenomena are within the reach of the existing ultracold gases experiments.Comment: main text+supplemental, 14 pages, 3 figures; v2: title, introduction, and summary modified, 3 refs. adde