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...

The U.S. Food and Drug Administration (FDA) balances risks and benefits before approving pharmaceuticals, as rationality would require. But powerful behavioral biases that lead to the mishandling of uncertainty also influence its approval process. The FDA places inordinate emphasis on errors of...

J13; J18; O15 </AbstractSection> Copyright Fang et al.; licensee Springer. 2013

One in twelve Americans suffers from asthma and its annual costs are estimated to exceed $50 billion. Simultaneously, the root causes of the disease remain unknown. A recent hypothesis speculates that maternal vitamin D levels during pregnancy affect the probability the fetus later develops...

Recommender and reputation systems seek to inform potential customers by securing current consumers' feedback about products and sellers. This paper proposes a payment-based system to induce honest reporting of feedback. The system applies proper scoring rules to each buyer's report, looking to...