An application of capital allocation principles to operational risk

The cost of operational risk refers to the capital needed to a fford the loss generated by ordinary activities of a firm. In this work we demonstrate how allocation principles can be used to the subdivision of the aggregate capital so that the firm can distribute this cost across its various constituents that generate operational risk. Several capital allocation principles are revised. Proportional allocation allows to calculate a relative risk premium to be charged to each unit. An example of fraud risk in the banking sector is presented and some correlation scenarios between business lines are compared. Keywords: solvency, quantile, value at risk, copulas

Prevalence and costs of multinutrution in hospitalized patients; the PREDyCES study

Justificación y objetivos: El estudio PREDyCES® tuvo dos objetivos principales. Primero, analizar la prevalencia de desnutrición hospitalaria (DH) en España tanto al ingreso como al alta, y segundo, estimar sus costes asociados. Métodos: Estudio nacional, transversal, observacional, multicéntrico, en condiciones de práctica clínica habitual que evaluó la presencia de desnutrición hospitalaria al ingreso y al alta mediante el NRS-2002®. Una extensión del estudio analizó la incidencia de complicaciones asociadas a la desnutrición, el exceso de estancia hospitalaria y los costes sanitarios asociados a la DH. Resultados: La prevalencia de desnutrición observada según el NRS-2002® fue del 23.7%. El análisis multivariante mostró que la edad, el género, la presencia de enfermedad oncológica, diabetes mellitus, disfagia y la polimedicación fueron los factores principales que se asociaron a la presencia de desnutrición. La DH se asoció a un incremento de la estancia hospitalaria, especialmente en aquellos pacientes que ingresaron sin desnutrición y que presentaron desnutrición al alta (15.2 vs 8.0 días; p < 0.001), con un coste adicional asociado de 5.829€ por paciente. Conclusiones: Uno de cada cuatro pacientes en los hospitales españoles se encuentra desnutrido. Esta condición se asocia a un exceso de estancia hospitalaria y costes asociados, especialmente en pacientes que se desnutren durante su hospitalización. Se debería generalizar el cribado nutricional sistemático con el objetivo de implementar intervenciones nutricionales de conocida eficacia.

The underestimation of compliance to direct help requests explained by adaptive sampling

Helping behavior is any intentional behavior that benefits another living being or group (Hogg & Vaughan, 2010). People tend to underestimate the probability that others will comply with their direct requests for help (Flynn & Lake, 2008). This implies that when they need help, they will assess the probability of getting it (De Paulo, 1982, cited in Flynn & Lake, 2008) and then they will tend to estimate one that is actually lower than the real chance, so they may not even consider worth asking for it. Existing explanations for this phenomenon attribute it to a mistaken cost computation by the help seeker, who will emphasize the instrumental cost of “saying yes”, ignoring that the potential helper also needs to take into account the social cost of saying “no”. And the truth is that, especially in face-to-face interactions, the discomfort caused by refusing to help can be very high. In short, help seekers tend to fail to realize that it might be more costly to refuse to comply with a help request rather than accepting. A similar effect has been observed when estimating trustworthiness of people. Fetchenhauer and Dunning (2010) showed that people also tend to underestimate it. This bias is reduced when, instead of asymmetric feedback (getting feedback only when deciding to trust the other person), symmetric feedback (always given) was provided. This cause could as well be applicable to help seeking as people only receive feedback when they actually make their request but not otherwise. Fazio, Shook, and Eiser (2004) studied something that could be reinforcing these outcomes: Learning asymmetries. By means of a computer game called BeanFest, they showed that people learn better about negatively valenced objects (beans in this case) than about positively valenced ones. This learning asymmetry esteemed from “information gain being contingent on approach behavior” (p. 293), which could be identified with what Fetchenhauer and Dunning mention as ‘asymmetric feedback’, and hence also with help requests. Fazio et al. also found a generalization asymmetry in favor of negative attitudes versus positive ones. They attributed it to a negativity bias that “weights resemblance to a known negative more heavily than resemblance to a positive” (p. 300). Applied to help seeking scenarios, this would mean that when facing an unknown situation, people would tend to generalize and infer that is more likely that they get a negative rather than a positive outcome from it, so, along with what it was said before, people will be more inclined to think that they will get a “no” when requesting help. Denrell and Le Mens (2011) present a different perspective when trying to explain judgment biases in general. They deviate from the classical inappropriate information processing (depicted among other by Fiske & Taylor, 2007, and Tversky & Kahneman, 1974) and explain this in terms of ‘adaptive sampling’. Adaptive sampling is a sampling mechanism in which the selection of sample items is conditioned by the values of the variable of interest previously observed (Thompson, 2011). Sampling adaptively allows individuals to safeguard themselves from experiences they went through once and turned out to lay negative outcomes. However, it also prevents them from giving a second chance to those experiences to get an updated outcome that could maybe turn into a positive one, a more positive one, or just one that regresses to the mean, whatever direction that implies. That, as Denrell and Le Mens (2011) explained, makes sense: If you go to a restaurant, and you did not like the food, you do not choose that restaurant again. This is what we think could be happening when asking for help: When we get a “no”, we stop asking. And here, we want to provide a complementary explanation for the underestimation of the probability that others comply with our direct help requests based on adaptive sampling. First, we will develop and explain a model that represents the theory. Later on, we will test it empirically by means of experiments, and will elaborate on the analysis of its results.

Available evidence and outcome of off-label use of rituximab in clinical practice

Purpose: To analyze the therapeutic indications for off-label use of rituximab, the available evidence for its use, the outcomes, and the cost. Methods: This was a retrospective analysis of patients treated with rituximab for off-label indications from January 2007 to December 2009 in two tertiary hospitals. Information on patient characteristics, medical conditions, and therapeutic responses was collected from medical records. Available evidence for the efficacy of rituximab in each condition was reviewed, and the cost of treatment was calculated. Results: A total of 101 cases of off-label rituximab use were analyzed. The median age of the patients involved was 53 [interquartile range (IQR) 37.568.0] years; 55.4 % were women. The indications for prescribing rituximab were primarily hematological diseases (46 %), systemic connective tissue disorders (27 %), and kidney diseases (20 %). Available evidence supporting rituximab treatment for these indications mainly came from individual cohort studies (53.5 % of cases) and case series (25.7 %). The short-term outcome (median 3 months, IQR 24 months) was a complete response in 38 % of cases and partial response in 32.6 %. The highest short-term responses were observed for systemic lupus erythematosus and membranous glomerulonephritis, and the lowest was for neuromyelitis optica, idiopathic thrombocytopenic purpura, and miscellaneous indications. Some response was maintained in long-term follow-up (median 23 months IQR 1230months) in 69.2%of patients showing a short-term response. Median cost per patient was 5,187.5 (IQR 5,187.57,781.3). Conclusions: In our study, off-label rituximab was mainly used for the treatment of hematological, kidney, and systemic connective tissue disorders, and the response among our patient cohort was variable depending on the specific disease. The level of evidence supporting the use of rituximab for these indications was low and the cost was very high. We conclude that more clinical trials on the off-label use of rituximab are needed, although these may be difficult to conduct in some rare diseases. Data from observational studies may provide useful information to assist prescribing in clinical practice.

Moral Hazard in Repeated Procurement of Services

This paper analyzes repeated procurement of services as a four-stage game divided into two periods. In each period there is (1) a contest stage à la Tullock in which the principal selects an agent and (2) a service stage in which the selected agent provides a service. Since this service effort is non-verifiable, the principal faces a moral hazard problem at the service stages. This work considers how the principal should design the period-two contest to mitigate the moral hazard problem in the period-one service stage and to maximize total service and contest efforts. It is shown that the principal must take account of the agent's past service effort in the period-two contest success function. The results indicate that the optimal way to introduce this `bias' is to choose a certain degree of complementarity between past service and current contest efforts. This result shows that contests with `additive bias' (`multiplicative bias') are optimal in incentive problems when effort cost is low (high). Furthermore, it is shown that the severity of the moral hazard problem increases with the cost of service effort (compared to the cost of contest effort) and the number of agents. Finally, the results are extended to more general contest success functions. JEL classification: C72; D82 Key words: Biased contests; Moral Hazard; Repeated Game; Incentives.

Available evidence and outcome of off-label use of rituximab in clinical practice

Purpose: To analyze the therapeutic indications for off-label use of rituximab, the available evidence for its use, the outcomes, and the cost. Methods: This was a retrospective analysis of patients treated with rituximab for off-label indications from January 2007 to December 2009 in two tertiary hospitals. Information on patient characteristics, medical conditions, and therapeutic responses was collected from medical records. Available evidence for the efficacy of rituximab in each condition was reviewed, and the cost of treatment was calculated. Results: A total of 101 cases of off-label rituximab use were analyzed. The median age of the patients involved was 53 [interquartile range (IQR) 37.5-68.0] years; 55.4 % were women. The indications for prescribing rituximab were primarily hematological diseases (46 %), systemic connective tissue disorders (27 %), and kidney diseases (20 %). Available evidence supporting rituximab treatment for these indications mainly came from individual cohort studies (53.5 % of cases) and case series (25.7 %). The short-term outcome (median 3 months, IQR 2-4 months) was a complete response in 38 % of cases and partial response in 32.6 %. The highest short-term responses were observed for systemic lupus erythematosus and membranous glomerulonephritis, and the lowest was for neuromyelitis optica, idiopathic thrombocytopenic purpura, and miscellaneous indications. Some response was maintained in long-term follow-up (median 23 months IQR 12-30months) in 69.2%of patients showing a short-term response. Median cost per patient was 5,187.5 (IQR 5,187.5-7,781.3). Conclusions: In our study, off-label rituximab was mainly used for the treatment of hematological, kidney, and systemic connective tissue disorders, and the response among our patient cohort was variable depending on the specific disease. The level of evidence supporting the use of rituximab for these indications was low and the cost was very high. We conclude that more clinical trials on the off-label use of rituximab are needed, although these may be difficult to conduct in some rare diseases. Data from observational studies may provide useful information to assist prescribing in clinical practice.