A principal provides budgets to agents (e.g., divisions of a firm or the principal's children) whose expenditures provide her benefits, either materially or because of altruism. Only agents know their potential to generate benefits. We prove that if the more "productive" agents are also more...

A principal provides budgets to agents (e.g., divisions of a firm or the principal's children) whose expenditures provide her benefits, either materially or because of altruism. Only agents know their potential to generate benefits. We prove that if the more "productive" agents are also more...

This paper provides the first rigorous, empirical evidence of the existence of Giffen behavior, i.e., a situation in which consumers respond to an increase in the price of a good by demanding more of it. We begin by examining several theoretical approaches to the Giffen phenomenon and show that...

Consumerism arises when patients acquire and use medical information from sources apart from their physicians, such as the Internet and direct-to-patient advertising. Consumerism has been hailed as a means of improving quality. This need not be the result. Consumerist patients place additional...

We use a hazard model to estimate the effect of environmental regulation on the diffusion of membrane cell production technology in the chlorine manufacturing industry. We estimate the effect of regulation on both the adoption of the membrane technology at existing plants and on the exit of...

People are more distrustful of managed care organizations (MCOs) than traditional health plans, a phenomenon that has become known as "managed-care backlash." In a model of the relationship between a patient, insurer, and physician, this paper shows that when the roles of insurer and provider...

A seller faces a buyer with unknown reservation value. We show that buyer risk aversion can make it in the seller's interest to haggle. That is, the seller should make an initial offer and then, if it is rejected, make a second offer with some probability strictly less than one. This is true...

We consider mechanism design in social choice problems in which agents’ types are continuous, multidimensional, and mutually payoff-relevant, and there are three or more agents. If the center receives a signal that is stochastically related to the agents’ types and direct returns are...

This paper presents a model of strategic interaction in which a third party intervenes on behalf of a government in its conflict with insurgents. It examines whether it is better for the intervenor to adopt an input-based strategy (i.e., specify the total resources it will spend) or an...

In many competitive environments, players need to commit either to a specific desired goal they will reach at any cost or to the resources they are willing to spend in pursuit of their goal. We model this situation as a two-stage game where players may compete either by setting input and letting...