Adverse selection, credit and efficiency: The case of the missing market

We analyze a standard environment of adverse selection in credit markets. In our environment,entrepreneurs who are privately informed about the quality of their projects need toborrow from banks. Conventional wisdom says that, in this class of economies, the competitiveequilibrium is typically inefficient.We show that this conventional wisdom rests on one implicit assumption: entrepreneurscan only borrow from banks. If an additional market is added to provide entrepreneurs withadditional funds, efficiency can be attained in equilibrium. An important characteristic of thisadditional market is that it must be non-exclusive, in the sense that entrepreneurs must be ableto simultaneously borrow from many different lenders operating in it. This makes it possible toattain efficiency by pooling all entrepreneurs in the new market while separating them in themarket for bank loans.

Understanding portfolio efficiency with conditioning information

We show that unconditionally efficient returns do not achieve the maximum unconditionalSharpe ratio, neither display zero unconditional Jensen s alphas, when returns arepredictable. Next, we define a new type of efficient returns that is characterized by thoseunconditional properties. We also study a different type of efficient returns that is rationalizedby standard mean-variance preferences and motivates new Sharpe ratios and Jensen salphas. We revisit the testable implications of asset pricing models from the perspective ofthe three sets of efficient returns. We also revisit the empirical evidence on the conditionalvariants of the CAPM and the Fama-French model from a portfolio perspective.

Adverse selection, credit and efficiency: The case of the missing market

We analyze a standard environment of adverse selection in credit markets. In our environment,entrepreneurs who are privately informed about the quality of their projects needto borrow in order to invest. Conventional wisdom says that, in this class of economies, thecompetitive equilibrium is typically inefficient.We show that this conventional wisdom rests on one implicit assumption: entrepreneurscan only access monitored lending. If a new set of markets is added to provide entrepreneurswith additional funds, efficiency can be attained in equilibrium. An important characteristic ofthese additional markets is that lending in them must be unmonitored, in the sense that it doesnot condition total borrowing or investment by entrepreneurs. This makes it possible to attainefficiency by pooling all entrepreneurs in the new markets while separating them in the marketsfor monitored loans.

Communication, coordination and efficiency in evolutionary one-population models

We analyze the role of commitment in pre-play communication for ensuringefficient evolutionarily stable outcomes in coordination games. All players are a priori identical as they are drawn from the same population. In games where efficient outcomes can be reached by players coordinating on the same action we find commitment to be necessary to enforce efficiency. In games where efficienct outcomes only result from play of different actions, communication without commitment is most effective although efficiency can no longer be guaranteed. Only when there are many messages then inefficient outcomes are negligible as their basins of attraction become very small.

On the efficiency and sensitivity of a pyramidal classification algorithm

In this paper we propose a Pyramidal Classification Algorithm,which together with an appropriate aggregation index producesan indexed pseudo-hierarchy (in the strict sense) withoutinversions nor crossings. The computer implementation of thealgorithm makes it possible to carry out some simulation testsby Monte Carlo methods in order to study the efficiency andsensitivity of the pyramidal methods of the Maximum, Minimumand UPGMA. The results shown in this paper may help to choosebetween the three classification methods proposed, in order toobtain the classification that best fits the original structureof the population, provided we have an a priori informationconcerning this structure.

Cost efficiency in primary care contracting: A stochastic frontier cost function approach

The principal aim of this paper is to estimate a stochastic frontier costfunction and an inefficiency effects model in the analysis of the primaryhealth care services purchased by the public authority and supplied by 180providers in 1996 in Catalonia. The evidence from our sample does not supportthe premise that contracting out has helped improve purchasing costefficiency in primary care. Inefficient purchasing cost was observed in thecomponent of this purchasing cost explicitly included in the contract betweenpurchaser and provider. There are no observable incentives for thecontracted-out primary health care teams to minimise prescription costs, whichare not explicitly included in the present contracting system.

Overconfidence and market efficiency with heterogeneous agents

We study financial markets in which both rational and overconfident agents coexist and make endogenous information acquisition decisions. We demonstrate the following irrelevance result: when a positive fraction of rational agents (endogeneously) decides to become informed in equilibrium, prices are set as if all investors were rational, and as a consequence the overconfidence bias does not aect informational efficiency, price volatility, rational traders expected profits or their welfare. Intuitively, as overconfidence goes up, so does price infornativeness, which makes rational agents cut their information acquisition activities, effectively undoing the standard effect of more aggressive trading by the overconfident.

Growth accounting in items of turbulence and death: efficiency, technology, capital accumulation and human capital 1929-1950

We employ a non-parametrical approach to growth accounting (Data Envelopment Analysis,DEA) to disentangle the proximate sources of labour productivity growth in 41 nationsbetween 1929 and 1950 by decomposing productivity growth into four components:technological change; efficiency catch-up (movements towards the production frontier),capital accumulation and human capital accumulation. We show that efficiency catch-upgenerally explains productivity growth, whereas technological change and factoraccumulation were limited and distorted by the effects of war. War clearly hamperedefficiency. Moreover, an unbalanced ratio of human capital to physical capital (a gap to thetechnological leader) was crucial for efficiency catching-up.

Market structure and hospital efficiency: Evaluating potential effects of deregulation in a national health service

In this article we examine the potential effect of market structureon hospital technical efficiency as a measure of performance controlled byownership and regulation. This study is relevant to provide an evaluationof the potential effects of recommended and initiated deregulation policiesin order to promote market reforms in the context of a European NationalHealth Service. Our goal was reached through three main empirical stages.Firstly, using patient origin data from hospitals in the region of Cataloniain 1990, we estimated geographic hospital markets through the Elzinga--Hogartyapproach, based on patient flows. Then we measured the market level ofconcentration using the Herfindahl--Hirschman index. Secondly, technicaland scale efficiency scores for each hospital was obtained specifying aData Envelopment Analysis. According to the data nearly two--thirds of thehospitals operate under the production frontier with an average efficiencyscore of 0.841. Finally, the determinants of the efficiency scores wereinvestigated using a censored regression model. Special attention waspaid to test the hypothesis that there is an efficiency improvement in morecompetitive markets. The results suggest that the number of competitors inthe market contributes positively to technical efficiency and there is someevidence that the differences in efficiency scores are attributed toseveral environmental factors such as ownership, market structure andregulation effects.

Bargaining efficiency and screening: An experimental investigation

This paper investigates whether information about fairness types canbe useful in lowering dispute costs and enhancing bargaining efficiency.An experiment was conducted in which subjects were first screened usinga dictator game, with the allocations chosen used to separate participantsinto two types. Mutually anonymous pairs of subjects then bargained, witha dispute cost structure imposed. Sorting with identification reducesdispute costs; there are also significant differences in bargainingefficiency across pairing types. Information about types is crucial forthese differences and also strongly affects the relative bargainingsuccess of the two types and the hypothetical optimal bargaining strategy.

Pension plan funding and stock market efficiency

The paper argues that the market signifficantly overvalues firms with severely underfunded pension plans. These companies earn lower stock returns than firms with healthier pension plans for at least five years after the first emergence of the underfunding. The low returns are not explained by risk, price momentum, earnings momentum, or accruals. Further, the evidence suggests that investors do not anticipate the impact of the pension liability on future earnings, and they are surprised when the negative implications of underfunding ultimately materialize. Finally, underfunded firms have poor operating performance, and they earn low returns, although they are value companies.

The quasi-judicial role of large retailers: An efficiency hypothesis of their relation with suppliers

The paper explores an efficiency hypothesis regarding the contractual process between large retailers, such as Wal-Mart and Carrefour, and their suppliers. The empirical evidence presented supports the idea that large retailers play a quasi-judicial role, acting as "courts of first instance" in their relationships with suppliers. In this role, large retailers adjust the terms of trade to on-going changes and sanction performance failures, sometimes delaying payments. A potential abuse of their position is limited by the need for re-contracting and preserving their reputations. Suppliers renew their confidence in their retailers on a yearly basis, through writing new contracts. This renovation contradicts the alternative hypothesis that suppliers are expropriated by large retailers as a consequence of specific investments.

Citizens' control and the efficiency of local public services

Està àmpliament acceptat que la descentralització fiscal incrementa el control dels ciutadans sobre els polítics, fomenta el rendiment de comptes i augmenta l¿eficiència. Aquest treball té per objectiu identificar les característiques socio-econòmiques dels ciutadans (votants potencials) que generen un major control sobre els responsables polítics locals provocant, així, un major nivell d'eficiència en un context descentralitzat.També s'analitzen les característiques fiscals dels governs locals que fomenten aquest control i eficiència. L'estudi s'ha aplicat a una mostra de municipis catalans seguint la metodologia convencional basada en l'estimació en dues etapes. A la primera etapa s'estima l'eficiència en que operen els municipis mitjançant la tècnica DEA. La novetat rau en el càlcul d'una nova versió d'indicador global d¿output municipal. En la segona etapa, a través d¿una estimació tipus Tobit (models censurats) i de mètodes bootstrap, es mostra com els factors abans comentats poden influir sobre l¿eficiència. Els resultats suggereixen que la forta presencia de comerciants, jubilats i persones amb dret a vot afavoreixen el control dels ciutadans, el rendiment de comptes i l¿eficiència. Un factor que facilita aquest control, i per tant una major eficiència, és la presència de baixos costos d'oportunitat d'obtenir informació sobre la gestió local dels serveis públics.

Measuring the efficiency in Spanish municipal refuse collection services

The objective of this study is to analyse the technical or productive efficiency ofthe refuse collection services in 75 municipalities located in the Spanish regionof Catalonia. The analysis has been carried out using various techniques. Firstly we have calculated a deterministic parametric frontier, then a stochastic parametric frontier, and finally, various non-parametric approaches (DEA and FDH). Concerning the results, these naturally differ according to the technique used to approach the frontier. Nevertheless, they have an appearance of solidity, at least with regard to the ordinal concordance among the indices of efficiency obtained by the different approaches, as is demonstrated by the statistical tests used. Finally, we have attempted to search for any relation existing between efficiency and the method (public or private) of managing the services. No significant relation was found between the type of management and efficiencyindices

Metal-Nitride-oxide-semiconductor light-emitting devices for general lighting.

The potential for application of silicon nitride-based light sources to general lighting is reported. The mechanism of current injection and transport in silicon nitride layers and silicon oxide tunnel layers is determined by electro-optical characterization of both bi- and tri-layers. It is shown that red luminescence is due to bipolar injection by direct tunneling, whereas Poole-Frenkel ionization is responsible for blue-green emission. The emission appears warm white to the eye, and the technology has potential for large-area lighting devices. A photometric study, including color rendering, color quality and luminous efficacy of radiation, measured under various AC excitation conditions, is given for a spectrum deemed promising for lighting. A correlated color temperature of 4800K was obtained using a 35% duty cycle of the AC excitation signal. Under these conditions, values for general color rendering index of 93 and luminous efficacy of radiation of 112 lm/W are demonstrated. This proof of concept demonstrates that mature silicon technology, which is extendable to lowcost, large-area lamps, can be used for general lighting purposes. Once the external quantum efficiency is improved to exceed 10%, this technique could be competitive with other energy-efficient solid-state lighting options. ©2011 Optical Society of America OCIS codes: (230.2090) Electro-optical devices; (150.2950) Illumination.