Comparative risk aversion when the outcomes are vectors

Pratt (1964) and Yaari (1969) contain the classical results pertaining to the equivalence of various notions of comparative risk aversion of von Neumann-Morgenstern utilities in the setting with real-valued outcomes. Some of these results have been extended to the setting with outcomes inComparative risk aversion, vector space of outcomes, acceptance set, vector-valued risk premia, vector-valued Arrow-Pratt coefficient, Pettis integral, ordered topological vector spaces, ordered Hilbert spaces

ON THE OPTIMAL COORDINATION OF UNINFORMED AGENTS BY AN INFORMED PRINCIPAL

We consider organizations with a single principal and many agents who interact in an environment with the following features -- (a) Nature im-perfectly informs the principal via a state-contingent signal, but not the agents, about the state of the world, (b) the principal selectively shares this information with the agents, thereby endogenously endow-ing them with private information that is coarser than his own, (c) the principal assigns action spaces to the agents, and (d) an agent’s control over the choice from his assigned action space is inalienable. Designing an organization involves specifying (c) and specifying an information dissemination system for implementing (b). Searching for an optimal design involves (1) deriving optimal performance from each design, and (2) comparing designs on the basis of their best performances. Our ex-istence results show the feasibility of performing Step (1) in a large class of cases.Existence theorems, optimal design, team, organization, principal-agent model

Duality mappings for the theory of risk aversion with vector outcomes

We consider a decision-making environment with an outcome space that is a convex and compact subset of a vector space belonging to a general class of such spaces. Given this outcome space, we de¯ne gen- eral classes of (a) risk averse von Neumann-Morgenstern utility func- tions de¯ned over the outcome space, (b) multi-valued mappings that yield the certainty equivalent outcomes corresponding to a lottery, (c) multi-valued mappings that yield the risk premia corresponding to a lottery, and (d) multi-valued mappings that yield the acceptance set of lotteries corresponding to an outcome. Our duality results establish that the usual mappings that generate (b), (c) and (d) from (a) are bi- jective. We apply these results to the problem of computing the value of ¯nancial assets to a risk averse decision-maker and show that this value will always be less than the arbitrage-free valuation.Risk aversion, vector outcomes, certainty equivalence, risk premia, acceptance set

DUAL REPRESENTATIONS OF STRONGLY MONOTONIC UTILITY FUNCTIONS

We present theorems that establish dualities, i.e., bijections, be- tween speci¯ed sets of direct utility functions, indirect utility functions and expenditure functions. The substantive properties characterizing the speci¯ed set of direct utility functions are strong monotonicity, upper semicontinuity and quasi-concavity. Our results are strictly in- termediate between two classes of analogous results in the literature. We also provide applications that use all the three classes of duality results.Direct utility function, indirect utility function, ex-penditure function, duality, strong monotonicity

Allocations and manipulation in Kyoto type protocols

We study an incomplete information, non-cooperative model of the determination of national emission endowments under a Kyoto type protocol with heterogeneous nations. The model generates a link between national types and equilibrium na-tional emission caps. We analyze this link to (a) derive the type-contingent ordering of emission allocations, (b) study the effects of growth on emission al-locations, and (c) study the strategies that nations can use to manipulate the emission allocation process. Synthesizing these results allows us to derive the implications of national heterogeneity and asymmetry of economic power in the capping process.correlated equilibrium, heterogeneity, incomplete information, Kyoto protocol, manipulation, non-cooperative game.

A NON-COOPERATIVE THEORY OF QUANTITY-RATIONING INTERNATIONAL TRANSFRONTIER POLLUTION

We study the problem caused by international transfrontier pollution. Our re-sults are derived from the analysis of an incomplete information, non-cooperative game model of the determination of emissions in a quantity-rationing setting. We model the emission capping negotiations using the best response dynamic pro-cess and provide natural conditions under which the process has a unique and globally asymptotically stable stationary point. We then analyze the link be-tween type profiles and the stationary points of the negotiation process to derive various comparative statics results and the type-contingent ordering of emission allocations. Finally, we study the investment strategies that nations can use prior to the negotiations in order to manipulate the equilibrium emission caps. The results have implications regarding the political economy of emission capping.Emission capping, non-cooperative game, negotiations, incomplete information, manipulation

An Economic Theory of Emission Cap Determination by an International Agreement

We attempt to clarify the problem of determination of national emission endowments under the Kyoto protocol. We argue that many issues, such as assigning culpability and compensation for the current global stock of carbon and the linking of emission endowments to per capita entitlements, are better handled through direct lump-sum transfers and not via distortions of the endowments of emission flows. Given these arguments, we model the distribution of endowments as equilibrium of a non-cooperative game. This framework allows us to make qualitative predictions about the impact of international differences on the pattern of emission caps. We also perform simple comparative statistic exercises that predict how the equilibrium caps vary with parametric changes. Moreover, we study how nations can manipulate the emission caps by strategic investment in technology and damage control.

Optimal Pollution Regulation in a Dynamic Stochastic Model

We model the interaction between a regulator and a polluting firm in the optimal mechanism design setting. The particular aspect of the interaction that we model is the regulator's problem of providing incentives to induce optimal adoption of pollution processing technology by the firm, subject to implementability constraints created by informational and incentive considerations. The regulator's welfare function is a formalization of the various conflicts and trade-offs that arise from the phenomenon of pollution. Our model offers a general, yet tractable, dynamic stochastic description of the pollution-creating technology used by the firm and characterizes the optimal contract in terms of a limited number of parameters that can be estimated directly from statistical data for the purpose of simulation and econometric testing.

Clinical challenges with excipients in insulin formulations and role of concentrated insulin

Most of the insulin formulations in clinical use contain phenol, meta-cresol or both as excipients. These excipients in insulin preparations provide stability and have antimicrobial properties. However, they are reported to be associated with undesirable side-effects especially localised allergic reactions. Amount of excipients injected per unit dose of insulin is a major determining factor in causation of these reactions. This review discusses the excipients in different insulin formulations available in India with potential of precipitating undesirable effects and the use of concentrated insulins to reduce these complications. To avoid the detrimental effects associated with excipients, removal of preservatives or use of insulin preparations devoid of excipients can be an option. Besides these approaches, one approach that can be considered is the use of concentrated insulin to reduce the volume of insulin dose and thereby the excipients. Concentrated insulins address the high insulin requirements of the growing population of patients with type 2 diabetes who require higher insulin doses. Concentrated insulins help in reduction of dose volume as well as amount of excipients injected per unit dose of insulin. U200 (concentrated r-DNA Human Insulin Premix 30/70-200 IU/ml) can be advantageous with better absorption from smaller quantity injected, lesser variability in absorption, lesser pain and discomfort due to smaller quantity, lesser chances of hypoglycaemia all of which can lead to better patient compliance. Thus, concentrated insulin U200 can be one of the alternatives to prevent/reduce clinical complications with excipients in insulins