Jacob Glazer

Debates and Decisions: On a Rationale of Argumentation Rules

Debates often serve as intitutions of mechanisms for resolving conflicts and making decisions. In this paper , we present a simple model in order to explain two phenomena concerning debate rules.

Licensing and the Sharing of Knowledge in Research Joint Ventures

Abstract We consider a three-stage model of research and development (R & D) to capture some key elements of research joint ventures (RJVs). In the last of the three stages, firms compete in the product market. In the second stage, the firms simultaneously choose unobservable R & D levels. In the first stage, the firms can share some or all of their knowledge with other firms in the RJV. We examine the ability of two simple licensing mechanisms to ensure both efficient sharing of knowledge and efficient R & D effort levels.

Setting health plan premiums to ensure efficient quality in health care: minimum variance optimal risk adjustment

Abstract Risk adjustment refers to the practice of paying health plans a premium per person (or per family) based on a formula using risk adjusters, such as age or gender, and weights on those adjusters. One role of risk adjustment is to make sure plans have an incentive to accept all potential enrollees. Another role, at least as important in our view, is to lead health plans to choose the efficient level of quality of care for the various services they offer. Most of the research and policy literature on risk adjustment focuses on the first problem. This paper proposes a new way to calculate weights in a risk adjustment formula that contends with both problems. For a given set of adjusters, we identify the weights that minimize the variance in plan predictable health care costs that are not explained by risk adjustment (addressing the access problem), subject to the payments satisfying conditions for an optimal risk adjuster (making sure plans provide the efficient quality). We call the formula minimum variance optimal risk adjustment (MVORA).

Multiple payers, commonality and free-riding in health care: Medicare and private payers.

Managed health care plans and providers in the US and elsewhere sell their services to multiple payers. For example, the three largest groups of purchasers from health plans in the US are employers, Medicaid plans, and Medicare, with the first two accounting for over 90% of the total enrollees. In the case of hospitals, Medicare is the largest buyer, but it alone only accounts for 40% of the total payments. While payers have different objectives and use different contracting practices, the plans and providers set some elements of the quality in common for all payers. In this paper, we study the interactions between a public payer, modeled on Medicare, which sets a price and takes any willing provider, a private payer, which limits providers and pays a price on the basis of quality, and a provider/plan, in the presence of shared elements of quality. The provider compromises in response to divergent incentives from payers. The private sector dilutes Medicare payment initiatives, and may, under some circumstances, repair Medicare payment policy mistakes. If Medicare behaves strategically in the presence of private payers, it can free-ride on the private payer and set its prices too low. Our paper has many testable implications, including a new hypothesis for why Medicare has failed to gain acceptance of health plans in the US.

Efficient allocation of a "prize"-King Solomon's dilemma

Abstract A planner is interested in allocating an indivisible good (a “prize”) to one of many agents in the economy. His objective is to give the prize to the agent who values it most, without any payments being made by the recipient. The planner, however, does not know the identity of this agent, while the agents themselves do. This paper shows how the planner can construct simple, multistage mechanisms with a unique subgame perfect equilibrium outcome. At this outcome, the agent who values the prize most gets it without any transfer of money being made by any of the agents or the planner.

Sharing Productive Knowledge in Internally Financed R&D Contests

We examine the optimal design of two-stage research and development (R&D) joint ventures. At the second stage, researchers choose R&D effort levels independently in an attempt to achieve an innovation. In the first stage, researchers have an opportunity to share endowments of productive knowledge. Initial pecuniary resources are limited, so rewards for disclosing knowledge and succeeding at the second stage must be financed from successful innovation. We derive conditions under which full sharing of knowledge and the socially desired levels of R&D effort can be motivated, and examine the optimal incentive structure when this ideal outcome cannot be implemented: full sharing will always be motivated at the first stage, but inefficient R&D effort wil be induced to foster information sharing. Copyright 1990 by Blackwell Publishing Ltd.

A NOTE ON ABREU-MATSUSHIMA MECHANISMS

IN A STIMULATING RECENT PAPER, Abreu and Matsushima (1992) (hereafter A-M) show how a class of social choice functions can be virtually implemented in iteratively undominated strategies. This work has several important features: the mechanisms used are finite and not too difficult to understand, and so less objectionable in this regard than many in the literature; the class of social choice functions implemented is large; and the solution concept-Nash equilibrium determined uniquely by iterative elimination of strongly dominated strategies-is relatively uncontroversial. The point of this note is to argue that the mechanisms used by A-M unfortunately tend to generate games in which the iterative removal of strongly dominated strategies sometimes is indeed (or ought to be) controversial.2 We proceed by first examining an example of a related but simpler implementation problem in which the argument is easily exposed, then indicating how the argument applies generally in the A-M setup. Consider the following much-discussed two-player coordination game:

Using global ratings of health plans to improve the quality of health care

Global ratings, such as those based on consumer satisfaction, are a commonly used form of report on the performance of health plans and providers. A simple averaging of the global rating by plan members leads to a problem: it gives a plan greater incentives to improve services used by low-cost members than services used by high-cost members. This paper presents a formal model of consumer formation of global ratings and the incentives these rating convey to plans. We use this model to characterize weights on consumer respondents to correct the incentive problem. We implement our proposed solution using data from the Consumer Assessments of Health Care Providers and Systems (CAHPS) and the Medicare Current Beneficiary Survey (MCBS). Our correction is low-cost, easily implemented on an on-going basis, and insensitive to assumptions about why health plans care about quality ratings.

A Model of Persuasion with Boundedly Rational Agents

A new model of persuasion is presented. A listener first announces and commits to a codex (i.e., a set of conditions). The speaker then presents a (not necessarily true) profile that must satisfy the codex in order for the listener to be persuaded. The speaker is boundedly rational in the sense that his ability to come up with a persuasive profile is limited and depends on the true profile and the content and framing of the codex. The circumstances under which the listener can design a codex that will implement his goal are fully characterized.

Managerial incentives and financial signaling in product market competition

This paper demonstrates how management compensation schemes can serve as an inexpensive and sometimes even free signaling mechanism. In the particular example studied here it is shown how a contract offered to the manager of a monopolistic tirm may induce him to take some actions that will credibly signal the Crm’s marginal cost and will deter entry if the firm is ‘suficiently’ ellicient. This signaling mechanism is not costly to the monopolist and therefore, it may prefer this mechanism to the costlier ‘limit pricing’ one.