Buying Frenzies

I extend DeGraba's model of buying frenzies. I identify conditions under which buying frenzies are the only possible equilibrium and under which rationing occurs in equilibriumBuying Frenzy, Rationing

Unpriced Quality

A monopolist deliberately charges the same price for differentiated products when high quality products are more likely to be allocated to low type consumers under uniform pricing. The argument can explain the use of ‘unpriced quality’ for concert tickets, sport events, and in many other situations.Price discrimination, second degree price discrimination, queuing, rationing

Surface and porosity of nanocrystalline boehmite xerogels

Boehmite xerogels are prepared by hydrolysis of Al(OC4H9)3 followed by peptization with HNO3 (H+/Al = 0, 0.07, 0.2). XRD and TEM show that these gels are made of nanosized crystals (5–9 nm in width and 3 nm thick). According to the amount of acid, no significant differences are found in size and shape, but only in the spatial arrangement of the crystallites. Nitrogen adsorption–desorption isotherms of nonpeptized gels are of type IV, whereas isotherms of peptized gels are of type I. These isotherms are analyzed by the t-plot method. The majority of pore volume results from intercrystalline mesopores, but the peptized gels also contain intercrystalline micropores. The particle packing is very dense for the gel peptized with H+/Al = 0.2 (porosity = 0.26), but it is less dense in non-peptized gel (porosity = 0.44). Heating these gels under vacuum creates, from 250 °C onwards, an intracrystalline microporosity resulting from the conversion of boehmite into transition alumina. But heating also causes intercrystalline micropores collapsing. The specific surface area increases up to a limit temperature (300 °C for nonpeptized gels and 400 °C for peptized) beyond which sintering of the particles begins and the surface decreases. The PSD are calculated assuming a cylindrical pore geometry and using the corrected Kelvin equation proposed by Kruk et al. Peptized xerogels give a monomodal distribution with a maximum near 2 nm and no pores are larger than 6 nm. Nonpeptized gels have a bimodal distribution with a narrow peak near to 2 nm and a broad unsymmetrical peak with a maximum at 4 nm. Heating in air above 400 °C has a strong effect on the porosity. As the temperature increases, there is a broadening of the distribution and a marked decrease of small pores (below 3 nm). However, even after treatment at 800 °C, micropores are still present

Price Variation Antagonism and Firm Pricing Policies

Pricing schemes that vary prices in response to demand shocks may antagonize consumers and reduce demand. At the same time, consumers may take advantage of the opportunities offered by price changes. Overall, the net impact of varying price on demand is ambiguous. We investigate the issue empirically, exploiting a unique dataset from a firm that has experimented with different pricing schemes. Each scheme is characterized by how much prices respond to demand variations. Holding average price and other variables constant, we find that demand is higher when prices vary more. The evidence suggests that the antagonism effect cannot be first order.Consumer demand, responsive pricing, fairness

A General Test of Gaming

An important lesson from the incentive literature is that explicit incentives may elicit dysfunctional and unintended responses, also known as gaming responses. The existence of these responses, however, is difficult to demonstrate in practice because this behavior is typically hidden from the researcher. We present a simple model showing that one can identify gaming by estimating the correlation between a performance measure and the true goal of the organization before and after the measure has been activated. Our hypothesis is that gaming takes place if this correlation decreases with activation. Using data from a public sector organization, we find evidence consistent with our hypothesis. We draw implications for the selection of performance measures.Performance Incentive, Performance Measurement, Gaming, Multitasking, Government Organization.

On the Sorting of Physicians across Medical Occupations

We model the sorting of medical students across medical occupations and identify a mechanism that explains the possibility of differential productivity across occupations. The model combines moral hazard and matching of physicians and occupations with pre-matching investments. In equilibrium assortative matching takes place; more able physicians join occupations less exposed to moral hazard risk, face more powerful performance incentives, and are more productive. Under-consumption of health services relative to the first best allocation increases with occupational (moral hazard) risk. Occupations with risk above a given threshold are not viable. The model offers an explanation for the persistence of distortions in the mix of health care services offered, the differential impact of malpractice risk across occupations, and the recent growth in medical specialization.performance measurement, moral hazard, incentives, matching, pre-matching investment, career choice, medical specialization

The Impact of Price Discrimination on Revenue: Evidence from the Concert Industry

Concert tickets can either be sold at a single price or at multiple prices corresponding to different seating categories. We study the relationship between price discrimination and revenue by examining variations in the number of seating categories across concert, tour, artist, location, and time. Offering multiple seating categories leads to revenues that are approximately 5 percent higher than with single price ticketing. The return to price discrimination is higher in markets with more heterogeneous demand, for musical groups that appeal to a more fragmented audience, in smaller venues and in more competitive markets. The return of increasing from three to four categories of seating is about half that of increasing from one to two.Price discrimination, return to price discrimination, second degree price discrimination

Sales, Quantity Surcharge, and Consumer Inattention

Quantity surcharges occur when firms market a product in two sizes and offer a promotion on the small size: the large size then costs more per unit than the small one. When quantity surcharges occur the sales of the large size decrease only slightly despite the fact that the small size is a cheaper option - a clear arbitrage opportunity. This behavior is consistent with the notion of rationally inattentive consumers that has been developed in models of information frictions. We discuss implications for consumer decision making, demand estimation, and firm pricing.quantity surcharge, sales, promotions, consumer inattention, quantity discounts, nonlinear pricing

Performance Incentives with Award Constraints

This paper studies the provision of incentives in a large U.S. training organization which is divided in about 50 independent pools of training agencies. The number and the size of the agencies within each pool vary greatly. Each pool distributes performance incentive awards to the training agencies it supervises, subject to two constraints: the awards cannot be negative and the sum of the awards cannot exceed an award budget. We characterize the optimal award function and derive simple predictions about how award prizes should depend on the number of agencies, on their sizes, and on their performances. Our results indicate that the constraints on the award distribution bind and reduce the overall efficiency of the incentive system.Performance Incentive, Limited liability, Fixed Award Budget, Government Organization.

Making Government Accountable: Lessons from a Federal Job Training Program

We describe the evolution of a performance measurement system in a government job-training program. In this program, a federal agency establishes performance measures and standards for sub-state agencies. We show that the performance measurement system's evolution is at least partly explained as a process of trial-and-error, characterized by a feedback loop: the federal agency establishes performance measures, the local managers learn how to game them, the federal agency learns about gaming and reformulates the performance measures, leading to possibly new gaming, and so on. The dynamics suggest that implementing a performance measurement system in government is not a one-time challenge but benefits from careful monitoring and perhaps frequent revision.