James C. Cox

How to identify trust and reciprocity

This paper uses a three-games (or triadic) design to identify trusting and reciprocating behavior. A large literature on single-game trust and reciprocity experiments is based on the implicit assumption that subjects do not have altruistic or inequality-averse other-regarding preferences. Such experimental designs test compound hypotheses that include the hypothesis that other-regarding preferences do not affect behavior. In contrast, experiments with the triadic design do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other-regarding preferences that are not conditional on the behavior of others. Decomposing trust from altruism and reciprocity from altruism or inequality aversion is critical to obtaining empirical information that can guide the process of constructing models that can increase the empirical validity of game theory.

Risk Factors for 30-Day Hospital Readmission among General Surgery Patients

BACKGROUND Hospital readmission within 30 days of an index hospitalization is receiving increased scrutiny as a marker of poor-quality patient care. This study identifies factors associated with 30-day readmission after general surgery procedures. STUDY DESIGN Using standard National Surgical Quality Improvement Project protocol, preoperative, intraoperative, and postoperative outcomes were collected on patients undergoing inpatient general surgery procedures at a single academic center between 2009 and 2011. Data were merged with our institutional clinical data warehouse to identify unplanned 30-day readmissions. Demographics, comorbidities, type of procedure, postoperative complications, and ICD-9 coding data were reviewed for patients who were readmitted. Univariate and multivariate analysis was used to identify risk factors associated with 30-day readmission. RESULTS One thousand four hundred and forty-two general surgery patients were reviewed. One hundred and sixty-three (11.3%) were readmitted within 30 days of discharge. The most common reasons for readmission were gastrointestinal problem/complication (27.6%), surgical infection (22.1%), and failure to thrive/malnutrition (10.4%). Comorbidities associated with risk of readmission included disseminated cancer, dyspnea, and preoperative open wound (p < 0.05 for all variables). Surgical procedures associated with higher rates of readmission included pancreatectomy, colectomy, and liver resection. Postoperative occurrences leading to increased risk of readmission were blood transfusion, postoperative pulmonary complication, wound complication, sepsis/shock, urinary tract infection, and vascular complications. Multivariable analysis demonstrates that the most significant independent risk factor for readmission is the occurrence of any postoperative complication (odds ratio = 4.20; 95% CI, 2.89-6.13). CONCLUSIONS Risk factors for readmission after general surgery procedures are multifactorial, however, postoperative complications appear to drive readmissions in surgical patients. Taking appropriate steps to minimize postoperative complications will decrease postoperative readmissions.

Theory and individual behavior of first-price auctions

First-price auction theory is extended to the case of heterogeneous bidders characterized byM-parameter log-concave utility functions. This model, and its specific two-parameter constant relative risk averse special case, is generally supported by the results of 47 experiments. The one-parameter special case that comprises most of the theoretical literature is not supported by the experiments. One anomaly for the two-parameter model is that too many of the subjects exhibit positive (or negative) intercepts in their linear estimated bid functions. Accordingly, we develop a specific three-parameter model, which introduces a utility of winning, and a threshold utility of surplus. The new model, tested directly by introducing lump-sum payments or charges for winning, is not falsified by the new experiments.

Trust, Reciprocity, and Other-Regarding Preferences: Groups Vs. Individuals and Males Vs. Females

Trust and reciprocity have attracted increasing attention as topics of research. Arrow (1974) explained that, because of asymmetric information, incomplete contracts, and the prohibitive transaction costs of perfect monitoring, much economic activity may require trust and reciprocity in order for mutual gains from exchange to be realized. And reciprocity may be essential to development of a modern economy in which much effort of highly-skilled labor cannot be effectively monitored.

Laboratory Experiments with a Finite-Horizon Job-Search Model

In this article we explain the essential role of controlled experiments in testing job-search models. We derive the testable implications of a finite-horizon job-search model and lay out the design of the controlled experiments that we use to test those implications. We present the results of several parametric and nonparametric tests, all conditional on the actual draws of the wage offers. Overall, we find close agreement between the predictions of the search model and observations of search duration and income for several experimental treatments.

Small- and Large-Stakes Risk Aversion: Implications of Concavity Calibration for Decision Theory

A growing literature reports the conclusions that: (a) expected utility theory does not provide a plausible theory of risk aversion for both small-stakes and large-stakes gambles; and (b) this decision theory should be replaced with an alternative theory characterized by loss aversion. This paper explains that the arguments in previous literature fail to support these conclusions. Either concavity calibration has no general implication for expected utility theory or it has problematic implications for all decision theories that involve concave transformations (utility or value functions) of positive money payoffs, which makes loss aversion irrelevant to the argument.

Trust and reciprocity: implications of game triads and social contexts

Trust and reciprocity have been observed in experiments with simple stylized games. Such characteristics of social preferences have been observed to vary with procedures that alter the social environment in an experiment, such as single blind or double blind payoff protocols. This paper reports an experiment on the effects of a change in the social context of an experiment on trust and reciprocity. The strong social context introduces a stylized version of a characteristic of everyday life in large cities: a player in one game knows that other games lie ahead but does not know precisely what those games will turn out to be nor with whom they will be played.

Auctions: Research Opportunities in Marketing

Despite growing interest in traditional and Internet auctions, the marketing literature on auctions is sparse. This paper outlines selected aspects of the research opportunity. We provide a brief description of the major auction mechanisms, outline key concepts and results from the economic analysis of auctions, and summarize the key findings in empirical tests of auction theory. We then identify areas for future research on auction markets, particularly those of interest to marketers in the new contexts created by the Internet.

Auction market theory of heterogeneous bidders

Abstract This paper is concerned with derivation of a non-cooperative equilibrium bid function for heterogeneous bidders in discriminative auctions.

On Testing the Utility Hypothesis

In order to be able to conduct a test of the (core) utility hypothesis that is not confounded with tests of (subsidiary) hypotheses that economic agents all have the same preferences and that their preferences are weakly separable, it is necessary to use data that are disaggregated and complete. In order to carry out a utility hypothesis test with complete data, revealed preference theory must first be extended. The generalised axiom of revealed preference is extended to include labour supply and portfolio choice. Then a complete, disaggregated data set is used to test the utility hypothesis and two preference separability hypotheses.