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This dissertation presents three essays in economics. Firstly, I study the problem of allocating an indivisible good between two agents under incomplete information. I provide a characterization of mechanisms that maximize the sum of the expected utilities of the agents among all feasible strategy-proof mechanisms: Any optimal mechanism must be a convex combination of two fixed price mechanisms and two option mechanisms. Secondly, I study the problem of allocating a non-excludable public good between two agents under incomplete information. An equal-cost sharing mechanism which maximizes the sum of the expected utilities of the agents among all feasible strategy-proof mechanisms is proved to be optimal. Under the equal-cost sharing mechanism, when the built cost is low, the public good is provided whenever one of the agents is willing to fund it at half cost; when the cost is high, the public good is provided only if both agents are willing to fund it. Thirdly, I analyze the problem of matching two heterogeneous populations. If the payoff from a match exhibits complementarities, it is well known that absent any friction positive assortative matching is optimal. Coarse matching refers to a situation in which the populations into a finite number of classes, then randomly matched within these classes. The focus of this essay is the performance of coarse matching schemes with a finite number of classes. The main results of this essay are the following ones. First, assuming a multiplicative match payoff function, I derive a lower bound on the performance of n-class coarse matching under mild conditions on the distributions of agents' characteristics. Second, I prove that this result generalizes to a large class of match payoff functions. Third, I show that these results are applicable to a broad class of applications, including a monopoly pricing problem with incomplete information, as well as to a cost-sharing problem with incomplete information. In these problems, standard models predict that optimal contracts sort types completely. The third result implies that a monopolist can capture a large fraction of the second-best profits by offering pooling contracts with a small number of qualities.
ContributorsShao, Ran (Author) / Manelli, Alejandro (Thesis advisor) / Chade, Hector (Thesis advisor) / Schlee, Edward (Committee member) / Kovrijnykh, Natalia (Committee member) / Arizona State University (Publisher)
Created2011
Description
The Patient Protection and Affordable Care Act of 2010 was created as an overhaul of the US Healthcare system with a goal of getting all American citizens and legal residents healthcare that was both affordable and of good quality. Now almost a year removed from it going into effect, this study looks to determine how the ACA has worked in getting individuals who were previously uninsured and required charitable-based healthcare into health insurance programs within a small population in Arizona. This study evaluates the type of insurance program, the quality and ease of access of the care, and the general affordability of the healthcare. This study found that 75% of individuals surveyed had gained health insurance in the last year, with 95% expecting to be insured for 2015. The large majority rated the quality of their care and the accessibility of it as good, with corresponding increased use of primary care providers as a health resource. The affordability of the care was still a major issue for those who were found to be uninsured and for those who were insured. Despite affordability issues, self-reported measures of general health and access to care were reported by the majority of respondents to have improved over the last 12 months.
ContributorsHonan, Timothy Francis (Author) / Ketcham, Jonathan (Thesis director) / Jehn, Megan (Committee member) / Barrett, The Honors College (Contributor) / Department of Chemistry and Biochemistry (Contributor) / School of Historical, Philosophical and Religious Studies (Contributor)
Created2015-05
Description
Currently, the medical industry employs an acute treatment process centered on responsiveness and restoration. This method fails those with chronic illness who require disease management and proactivity. As a solution, the medical industry has implemented programs focused on providing integrated, coordinated care. This project examines two primary models to accommodate chronically ill patients: Accountable Care Organizations (ACOs) and Patient Centered Medical Homes (PCMHs). Specifically, this paper examines the data from Pioneer and Medicare Shared Savings Program ACOs. In the aggregate, the data indicate that these programs have been unsuccessful due to several key issues: a lack of patient and physician engagement, failure to incentivize medical professionals and failed collaboration between both ACOs and PCMHs. Remedying these issues would improve the ability of both ACOs and PCMHs to provide integrated, comprehensive care to patients with chronic illnesses.
ContributorsWoods, Cassie Marie (Author) / Ketcham, Jonathan (Thesis director) / Samper, Adriana (Committee member) / Barrett, The Honors College (Contributor) / Department of Marketing (Contributor)
Created2015-05
Description
Objective: To assess and quantify the effect of state’s price transparency regulations (hereafter, PTR) on healthcare pricing.
Data Sources: I use the Healthcare Cost and Utilization Project’s Nationwide Inpatient Sample (NIS) from 2000 to 2011. The NIS is a 20% sample of all inpatient claims. The Manhattan Institute supplied data on the availability of health savings accounts in each state. State PTR implementation dates were gathered by Hans Christensen, Eric Floyd, and Mark Maffett of University of Chicago’s Booth School of Business by contacting the health department, hospital association, or website controller in each state.
Study Design: The NIS data was collapsed by procedure, hospital, and year providing averages for the dependent variable, Cost, and a host of covariates. Cost is a product of Total Charges within the NIS and the hospital’s Cost to Charge ratio. A new binary variable, PTR, was defined as ‘0’ if the year was strictly less than the disclosure website’s implementation date, ‘1’ for afterwards, and missing for the year of implementation. Then, using multivariate OLS regression with fixed effect modeling, the change in cost from before to after the year of implementation is estimated.
Principal Findings: The analysis estimates the effect of PTR to decrease the average cost per procedure by 7%. Specifications identify within state, within hospital, and within procedure variation, and reports that 78% of the cost decrease is due to within-hospital, within-procedure price discounts. An additional model includes the interaction of PTR with the prevalence of health savings accounts (hereafter, HSAs) and procedure electivity. The results show that PTR lowers costs by an additional 3 percent with each additional 10 percentage point increase in the availability of HSAs. In contrast, the cost reductions from PTR were much smaller for procedures more frequently coded as elective.
Conclusions: The study concludes price transparency regulations can lead to a decrease in a procedure’s costs on average, primarily through price discounts and slightly through lower cost procedures, but not due to patients moving to cheaper hospitals. This implies that hospitals are taking initiative and lowering prices as the competition’s prices become publically available suggesting that hospitals – not patients – are the biggest users of price transparency websites. Hospitals are also finding some ways to provide cheaper alternatives to more expensive procedures. State regulators should evaluate if a better metric other than charge prices, such as expected out-of-pocket payments, would evoke greater patient participation. Furthermore, states with higher prevalence of HSAs experience greater effects of PTR as expected since patients with HSAs have greater incentives to lower their costs. Patients should expect a shift towards plans that offer these types of savings accounts since they’ve shown to have a reduction of health costs on average per procedure in states with higher prevalence of HSAs.
Data Sources: I use the Healthcare Cost and Utilization Project’s Nationwide Inpatient Sample (NIS) from 2000 to 2011. The NIS is a 20% sample of all inpatient claims. The Manhattan Institute supplied data on the availability of health savings accounts in each state. State PTR implementation dates were gathered by Hans Christensen, Eric Floyd, and Mark Maffett of University of Chicago’s Booth School of Business by contacting the health department, hospital association, or website controller in each state.
Study Design: The NIS data was collapsed by procedure, hospital, and year providing averages for the dependent variable, Cost, and a host of covariates. Cost is a product of Total Charges within the NIS and the hospital’s Cost to Charge ratio. A new binary variable, PTR, was defined as ‘0’ if the year was strictly less than the disclosure website’s implementation date, ‘1’ for afterwards, and missing for the year of implementation. Then, using multivariate OLS regression with fixed effect modeling, the change in cost from before to after the year of implementation is estimated.
Principal Findings: The analysis estimates the effect of PTR to decrease the average cost per procedure by 7%. Specifications identify within state, within hospital, and within procedure variation, and reports that 78% of the cost decrease is due to within-hospital, within-procedure price discounts. An additional model includes the interaction of PTR with the prevalence of health savings accounts (hereafter, HSAs) and procedure electivity. The results show that PTR lowers costs by an additional 3 percent with each additional 10 percentage point increase in the availability of HSAs. In contrast, the cost reductions from PTR were much smaller for procedures more frequently coded as elective.
Conclusions: The study concludes price transparency regulations can lead to a decrease in a procedure’s costs on average, primarily through price discounts and slightly through lower cost procedures, but not due to patients moving to cheaper hospitals. This implies that hospitals are taking initiative and lowering prices as the competition’s prices become publically available suggesting that hospitals – not patients – are the biggest users of price transparency websites. Hospitals are also finding some ways to provide cheaper alternatives to more expensive procedures. State regulators should evaluate if a better metric other than charge prices, such as expected out-of-pocket payments, would evoke greater patient participation. Furthermore, states with higher prevalence of HSAs experience greater effects of PTR as expected since patients with HSAs have greater incentives to lower their costs. Patients should expect a shift towards plans that offer these types of savings accounts since they’ve shown to have a reduction of health costs on average per procedure in states with higher prevalence of HSAs.
ContributorsSabol, Joshua Lawrence (Author) / Reiser, Mark (Thesis director) / Ketcham, Jonathan (Committee member) / Dassanayake, Maduranga (Committee member) / Barrett, The Honors College (Contributor) / School of Mathematical and Statistical Sciences (Contributor) / Department of Supply Chain Management (Contributor)
Created2015-05
Description
Prenatal care is a widely administered preventative care service, and its adequate use has been shown to decrease poor infant and maternal health outcomes. Today however, in the United States, preterm birth rates remain among the highest in the industrialized world, with low socioeconomic women having the highest risk of preterm births. This group of women also face the greatest barriers to access adequate prenatal care in the United States. This paper explores the viability of short message service to help bridge gaps in prenatal care for low socioeconomic women in the United States and provides areas for further research.
ContributorsMiles, Kelly Nicole (Author) / Ketcham, Jonathan (Thesis director) / Santanam, Raghu (Committee member) / Barrett, The Honors College (Contributor) / W. P. Carey School of Business (Contributor) / Department of Marketing (Contributor) / Department of Finance (Contributor)
Created2014-05
Description
The healthcare industry is currently facing significant changes. One of the changes in the industry is a movement towards patient-focused care, which considers the patient as a person and the impact of care on the person. Patient experience is part of patient-focused care, and has similarities to the marketing term customer experience, which contributes to happier customers and long-term financial growth and success for businesses. This thesis defines current issues in patient experience as it relates to hospital manager decision making. Through secondary research, this thesis demonstrates what patient experience is, the role it plays in healthcare and hospital settings, the pressures on hospitals to increase patient experience performance, how patient experience performance is measured, and what strategies or action drive improvements under current performance measurements. Many studies and articles exist examining each of these issues individually. However, these sources do not comprehensively define patient experience in hospitals with perspective on how this influences hospital strategy and decision-making. Previous works on patient experience from the perspective of hospital strategy do not include considerations for recent industry shifts, most notably the Patient Protection and Affordable Care Act. The collected definitions in this thesis provide guidance of relevant concerns hospital managers consider when formulating organization-wide strategy related to patient experience. This thesis explains how patient experience contributes to the success of hospitals in the short-term, medium-term, and long-term and how patient experience may shift its focus over time. Short-term concerns include specific regulations and definitions from the Centers for Medicare and Medicaid services, responsible for over half of all payments to hospitals. Conforming to CMS standards is a matter of survival for most hospitals in the short-term. Hospitals are adjusting to rules and payment models not in existence just two years ago. First, hospitals will adapt, and then hospitals will strive to optimize under new standards as well as respond to adjustments in the rules over the next several years. After patient experience standards are well established, certain aspects of patient experience will be part of long-term differentiation and success for hospitals. Responding comprehensively to the shift towards improving patient experience is a critical aspect for hospitals to weather the many changes in the healthcare industry. Patient experience will provide better care to patients and better financial health to the hospitals that perform above patient experience standards.
ContributorsWilton, Kara Alexandra (Author) / Ketcham, Jonathan (Thesis director) / Ostrom, Amy (Committee member) / Barrett, The Honors College (Contributor) / W. P. Carey School of Business (Contributor) / Department of Supply Chain Management (Contributor) / Department of Marketing (Contributor)
Created2014-05
Description
Economists, political philosophers, and others have often characterized social preferences regarding inequality by imagining a hypothetical choice of distributions behind "a veil of ignorance". Recent behavioral economics work has shown that subjects care about equality of outcomes, and are willing to sacrifice, in experimental contexts, some amount of personal gain in order to achieve greater equality. We review some of this literature and then conduct an experiment of our own, comparing subjects' choices in two risky situations, one being a choice for a purely individualized lottery for themselves, and the other a choice among possible distributions to members of a randomly selected group. We find that choosing in the group situation makes subjects significantly more risk averse than when choosing an individual lottery. This supports the hypothesis that an additional preference for equality exists alongside ordinary risk aversion, and that in a hypothetical "veil of ignorance" scenario, such preferences may make subjects significantly more averse to unequal distributions of rewards than can be explained by risk aversion alone.
ContributorsTheisen, Alexander Scott (Co-author) / McMullin, Caitlin (Co-author) / Li, Marilyn (Co-author) / DeSerpa, Allan (Thesis director) / Schlee, Edward (Committee member) / Baldwin, Marjorie (Committee member) / Barrett, The Honors College (Contributor) / Department of Economics (Contributor) / School of Mathematical and Statistical Sciences (Contributor) / Economics Program in CLAS (Contributor) / School of Historical, Philosophical and Religious Studies (Contributor)
Created2014-05
Description
One decision procedure dominates a given one if it performs well on the entire class of problems the given decision procedure performs well on, and then goes on to perform well on other problems that the given decision procedure does badly on. Performing well will be defined as generating higher expected utility before entering a problem. In this paper it will be argued that the timeless decision procedure dominates the causal
and evidential decision procedures. It will also be argued in turn that the updateless decision procedure dominates the timeless decision procedure. The difficulties of formalizing a modern variant of the ”smoking gene” problem will then be briefly examined.
and evidential decision procedures. It will also be argued in turn that the updateless decision procedure dominates the timeless decision procedure. The difficulties of formalizing a modern variant of the ”smoking gene” problem will then be briefly examined.
ContributorsHintze, Daniel Edward (Author) / Armendt, Brad (Thesis director) / Schlee, Edward (Committee member) / DeSerpa, Allan (Committee member) / Barrett, The Honors College (Contributor) / Economics Program in CLAS (Contributor)
Created2014-05
Description
I conduct a two-fold study on the relationship between adverse selection and nonlinear pricing in competitive insurance markets. First, I reassess empirical evidence of adverse selection in life insurance with the Health and Retirement Study (HRS) data used by Cawley and Philipson (1999). Specifically, I evaluate the shape of the premium schedule and present indications of quantity premia beyond a certain coverage level. The observed pricing schedule appears like the "backward-S-shaped" curve described by Chade and Schlee (2012); I discuss why this result cannot be entirely explained by fixed costs of underwriting. Second, I critique the arguments against adverse selection in existing literature by modifying the Rothschild and Stiglitz (1976) model of competitive insurance markets. I present several existing models and a new framework to explain how adverse selection and quantity discounts can coexist in equilibrium. These modifications deviate from the standard models of competitive insurance, but produce plausible hypotheses with conclusions contrary to conventional theoretical results.
ContributorsMahan, Scott Alexander (Author) / Schlee, Edward (Thesis director) / Silverman, Daniel (Committee member) / School of Mathematical and Statistical Sciences (Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2017-05
Description
I began this thesis because I was confused about economics. I wondered why there were so many different models. I didn't understand how they fit together. I was also confused by the assumptions being made. For instance, the assumption that humans are rational utility-maximizers did not seem to agree with my own experiences. With my director Dr. Edward Schlee's help, my thesis has become an inquiry into the state of economic methodology, both in theory and in practice. The questions that drive this paper are: How do economists choose between theories? What is the purpose of economic theory? What is the role of empirical data in assessing models? What role do assumptions play in theory evaluation, and should assumptions make sense? Part I: Methodology is the theoretical portion of the paper. I summarize the essential arguments of the two main schools of thought in economic methodology, and argue for an updated methodology. In Part II: A case study: The expected utility hypothesis, I examine methodology in practice by assessing a handful of studies that seek to test the expected utility hypothesis. Interestingly, I find that there is a different between what economists say they are doing, and what they actually seem to be doing. Throughout this paper, I restrict my analysis to microeconomic theory, simply because this is the area with which I am more familiar. I intend this paper to be a guide for my fellow students and rising economists, as well as for already practicing economists. I hope it helps the reader better understand methodology and improve her own practice.
ContributorsKang, Dominique (Author) / Schlee, Edward (Thesis director) / Schoellman, Todd (Committee member) / Boerner, Rochus (Committee member) / Barrett, The Honors College (Contributor)
Created2013-05