A dual characterization of incentive efficiency

We show that incentive efficient allocations in economies with adverse selection and moral hazard can be determined as optimal solutions to a linear programming problem and we use duality theory to obtain a complete characterization of the optima. Our dual analysis identifies welfare effects associated with the incentives of the agents to truthfully reveal their private information. Because these welfare effects may generate non-convexities, incentive efficient allocations may involve randomization. Other properties of incentive efficient allocations are also derived.

Award errors and permanent disability benefits in Spain

There is a controversial debate about the effects of permanent disability benefits on labormarket behavior. In this paper we estimate equations for deserving and receiving disabilitybenefits to evaluate the award error as the difference in the probability of receiving anddeserving using survey data from Spain. Our results indicate that individuals aged between55 and 59, self-employers or working in an agricultural sector have a probability of receiving a benefit without deserving it significantly higher than the rest of individuals. We also find evidence of gender discrimination since male have a significantly higher probability of receiving a benefit without deserving it. This seems to confirm that disability benefits are being used as an instrument for exiting the labor market for some individuals approaching the early retirement or those who do not have right to retire early. Taking into account that awarding process depends on Social Security Provincial Department, this means that some departments are applying loosely the disability requirements for granting disability benefits.

On the valuation and incentive effects of executive cash bonus contracts

Executive compensation packages are often valued in an inconsistent manner: while employee stock options (ESOs) are typically valued ex-ante, cash bonuses are valued ex-post. This renders the existing valuation models of employee compensation packages theoretically unsatisfactory and, potentially, empirically distortive. In this paper, we propose an option-based framework for ex-ante valuation of cash bonus contracts. After obtaining closed-form expressions for ex-ante values of several frequently used types of bonus contracts, we utilize them to explore the e¤ects that the shape of a bonus contract has on the executive s attitude toward risk-taking. We, also, study pay-performance sensitivity of such contracts. We show that the terms of a bonus contract can dramatically impact both risk-taking behavior as well as pay-performance incentives. Several testable predictions are made, and venues of future research outlined.

Competition amongst contests

This article analyses the allocation of prizes in contests. While existing models consider a single contest with an exogenously given set of players, in our model several contests compete for participants. As a consequence, prizes not only induce incentive effects but also participation effects. We show that contests that aim to maximize players aggregate effort will award their entire prize budget to the winner. In contrast, multiple prizes will be awarded in contests that aim to maximize participation and the share of the prize budget awarded to the winner increases in the contests randomness. We also provide empirical evidence for this relationship using data from professional road running. In addition, we show that prize structures might be used to screen between players of differing ability.

In memoriam Antonio Prevosti (1919-2011), a pioneer of genetics of natural populations

Prof. Dr. Antonio Prevosti was born on the 15th of February, 1919, at Barcelona where he grew up and lived with his wife Maria Monclús and his family until his death. Between the years 1939 and 1942 he registered at the University of Barcelona and finished his studies there with the"University Degree in Natural Science" obtaining the extraordinary award of his promotion. Immediately afterwards he started his research about the growth rate of Barcelona school children from two very different social groups at the Anthropology Laboratory of the University of Barcelona. The obtained results were published in his Doctoral Thesis (1948). Further investigations on quantitative traits in human populations improved his knowledge of statistical analyses and provided the basis for a scholarship from the Italian Ministry of Foreign Affairs to work at the Institute of Statistical and Demographical Sciences in Rome directed by Prof. C. Gini.

Counteracting incentive sensitization in severe alcohol dependence using deep brain stimulation of the nucleus accumbens: clinical and basic science aspects

The ventral striatum / nucleus accumbens has been implicated in the craving for drugs and alcohol which is a major reason for relapse of addicted people. Craving might be induced by drug-related cues. This suggests that disruption of craving-related neural activity in the nucleus accumbens may significantly reduce craving in alcohol-dependent patients. Here we report on preliminary clinical and neurophysiological evidence in three male patients who were treated with high frequency deep brain stimulation of the nucleus accumbens bilaterally. All three had been alcohol dependent for many years, unable to abstain from drinking, and had experienced repeated relapses prior to the stimulation. After the operation, craving was greatly reduced and all three patients were able to abstain from drinking for extended periods of time. Immediately after the operation but prior to connection of the stimulation electrodes to the stimulator, local field potentials were obtained from the externalized cables in two patients while they performed cognitive tasks addressing action monitoring and incentive salience of drug related cues. LFPs in the action monitoring task provided further evidence for a role of the nucleus accumbens in goal-directed behaviors. Importantly, alcohol related cue stimuli in the incentive salience task modulated LFPs even though these cues were presented outside of the attentional focus. This implies that cue-related craving involves the nucleus accumbens and is highly automatic.