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122
Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment.
- QUARTERLY JOURNAL OF ECONOMICS
, 2010
"... It is often argued that cost-sharing—charging a subsidized, positive price— for a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument through a field experiment in Kenya, in which we randomized the price at which prena ..."
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Cited by 86 (8 self)
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It is often argued that cost-sharing—charging a subsidized, positive price— for a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument through a field experiment in Kenya, in which we randomized the price at which prenatal clinics could sell long-lasting antimalarial insecticide-treated bed nets (ITNs) to pregnant women. We find no evidence that cost-sharing reduces wastage on those who will not use the product: women who received free ITNs are not less likely to use them than those who paid subsidized positive prices. We also find no evidence that costsharing induces selection of women who need the net more: those who pay higher prices appear no sicker than the average prenatal client in the area in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by sixty percentage points when the price of ITNs increases from zero to $0.60 (i.e., from 100 % to 90% subsidy), a price still $0.15 below the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of the impact of ITN prices on child mortality that incorporates both private and social returns to ITN usage. Overall, our results suggest that free distribution of ITNs could save many more lives than cost-sharing programs have achieved so far, and, given the large positive externality associated with widespread usage of ITNs, would likely do so at a lesser cost per life saved. ∗ We thank Larry Katz, the editor, and four anonymous referees for comments that significantly improved the paper. We also thank David Autor, Moshe Bushinsky,
Leadership Giving in Charitable Fund-raising
- Journal of Public Economic Theory
, 2006
"... Why do charities often begin new capital fund drives by announcing a large contribution by a single wealthy donor? This paper explores the possibility that such “leadership giving ” provides a signal to all other givers that the charity is of high quality. The dilemma is that if the lead giver can d ..."
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Cited by 64 (1 self)
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Why do charities often begin new capital fund drives by announcing a large contribution by a single wealthy donor? This paper explores the possibility that such “leadership giving ” provides a signal to all other givers that the charity is of high quality. The dilemma is that if the lead giver can deceive others to believe the charity is of higher quality than it truly is, then these followers will make larger contributions, which will benefit the leader. Hence, the leader must give an unusually large amount to convey a credible signal of the quality. This sets up a warof-attrition game for who will pay the cost to signal the quality. Since the wealthy have the lowest opportunity cost of providing the signal, they, in equilibrium, move first to provide the signal of quality with exceptionally large gifts. 1.
Signaling theory: A review and assessment
- Journal of Management
, 2011
"... Signaling theory is useful for describing behavior when two parties (individuals or organiza-tions) have access to different information. Typically, one party, the sender, must choose whether and how to communicate (or signal) that information, and the other party, the receiver, must choose how to i ..."
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Cited by 36 (0 self)
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Signaling theory is useful for describing behavior when two parties (individuals or organiza-tions) have access to different information. Typically, one party, the sender, must choose whether and how to communicate (or signal) that information, and the other party, the receiver, must choose how to interpret the signal. Accordingly, signaling theory holds a prominent posi-tion in a variety of management literatures, including strategic management, entrepreneurship, and human resource management. While the use of signaling theory has gained momentum in recent years, its central tenets have become blurred as it has been applied to organizational concerns. The authors, therefore, provide a concise synthesis of the theory and its key concepts, review its use in the management literature, and put forward directions for future research that will encourage scholars to use signaling theory in new ways and to develop more complex formulations and nuanced variations of the theory.
Does education raise productivity or just reflect it?
, 2002
"... Education has an important effect on wages but it not clear whether this is because education raises productivity or because education is simply a signal of ability. We implement a number of existing tests for discriminating between these two explanations and find that they do not support the signa ..."
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Cited by 35 (5 self)
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Education has an important effect on wages but it not clear whether this is because education raises productivity or because education is simply a signal of ability. We implement a number of existing tests for discriminating between these two explanations and find that they do not support the signalling hypothesis. However, we have severe reservations about these results and we propose an alternative test based on changes in education incentives caused by changes in the minimum school leaving age in the 1970s. Using this idea we find that UK data appear to strongly support the human capital explanation. An important issue in the economics of education is that an individual's education has an effect on wages paid in the labour market. For example, Human capital explanations, pioneered by
The Signaling Role of Promotions: Further Theory and Empirical Evidence
, 2007
"... An extensive theoretical literature has developed that investigates the role of promotions as a signal of worker ability. There have been no tests, however, of the empirical validity of this idea. In this paper we develop the theory in a manner that allows us to generate testable predictions, and th ..."
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Cited by 34 (6 self)
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An extensive theoretical literature has developed that investigates the role of promotions as a signal of worker ability. There have been no tests, however, of the empirical validity of this idea. In this paper we develop the theory in a manner that allows us to generate testable predictions, and then investigate the validity of these predictions using a longitudinal data set that contains detailed information concerning the internal-labor-market history of a medium-sized firm in the financial-services industry. Our results support the notion that signaling is both a statistically significant and economically significant factor in promotion decisions. The paper also contributes to the extensive literature on the An extensive theoretical literature has investigated the idea that promotions serve as a signal of worker ability. 1 By this we mean that when a worker is promoted the event is observed by other potential employers, and these other firms infer the worker is of high ability. Despite the significant theoretical attention paid to this idea, however, there has been no empirical investigation of the theory’s real-world
Conflicts of interest, information provision, and competition in the financial services industry
- Journal of Financial Economics
, 2007
"... In some markets, such as the market for drugs or for financial services, sellers have better information than buyers regarding the matching between the buyer’s needs and the good’s actual character-istics. Depending on the market structure, this may lead to conflicts of interest and/or the underprov ..."
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Cited by 28 (1 self)
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In some markets, such as the market for drugs or for financial services, sellers have better information than buyers regarding the matching between the buyer’s needs and the good’s actual character-istics. Depending on the market structure, this may lead to conflicts of interest and/or the underprovision of information by the seller. This paper studies this issue in the market for financial services. The anal-ysis presents a new model of competition between banks, as banks’ price competition influences the ensuing incentives for truthful infor-mation revelation. We compare two different firm structures, special-ized banking, where financial institutions provide a unique financial ∗Financial support from the Fondation Banque de France and Barcelona Economics (CREA) is gratefully acknowledged. Shapiro also acknowledges the financial support from DGES and FEDER under BEC2003-00412.We thank Ricardo Fuentes and Judit Montoriol for their research assistance. We give special thanks to Douglas Diamond and David Blair for their detailed suggestions. We are also grateful to Yeon-Koo Che, Fabrizio Germano,
Repeated Signaling Games
- Games and Economic Behavior
, 2009
"... Although many signaling situations are best interpreted as repeated games, prior research often models them as one-shot games. We analyze a class of repeated signaling games in which the informed player’s type is persistent and the history of actions are perfectly observable. In this context a large ..."
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Cited by 13 (0 self)
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Although many signaling situations are best interpreted as repeated games, prior research often models them as one-shot games. We analyze a class of repeated signaling games in which the informed player’s type is persistent and the history of actions are perfectly observable. In this context a large class of possibly complex sequences of signals can be supported as the separating equilibrium actions of the “strong type ” of the informed player. We characterize the set of such sequences. We also characterize the sequences of signals in least cost separating equilibria of these games. We show that these sequences in general have a simple structure. Moreover, many of them involve costly signaling after beliefs become degenerate.
Accidents Will Happen? Unintentional Childhood Injuries and the Effects of Child Care Regulations
- Journal of Health Economics
, 2004
"... of Chicago, the Child Care to Welfare Conference and referees provided helpful comments on earlier ..."
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Cited by 12 (4 self)
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of Chicago, the Child Care to Welfare Conference and referees provided helpful comments on earlier
Micro-loans, Insecticide-Treated Bednets and Malaria: Evidence from a randomized controlled trial in Orissa (India
, 2011
"... Many severe health risks in developing countries could be substantially reduced with access to appropri-ate preventive measures. However, the associated costs are often high enough to restrict access among poor households, and free provision through public health campaigns is often not financially f ..."
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Cited by 11 (0 self)
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Many severe health risks in developing countries could be substantially reduced with access to appropri-ate preventive measures. However, the associated costs are often high enough to restrict access among poor households, and free provision through public health campaigns is often not financially feasible. We describe findings from the first large-scale cluster randomized controlled trial in a developing country context that evaluates the uptake of a health-protecting technology, insecticide-treated bednets (ITNs), through micro-consumer loans, as compared to free distribution and control conditions. Numerous stud-ies have shown that widespread, regular use of ITNs is one the most effective preventive measures against malaria. However, ownership rates remain very low in most malarious areas, including our study areas in rural Orissa (India). Despite the un-subsidized price, 52 percent of sample households purchased at least one ITN, leading to 16 percent of individuals using a treated net the previous night, relative to only 2 percent in control areas where nets were not offered for sale. However, the increase fell significantly short of the 47 percent previous-night usage rate achieved with free distribution. Most strikingly, we find that neither micro-loans nor free distribution led to improvements in malaria and anemia prevalence, mea-sured using blood tests. We examine and rule out several plausible explanations for this latter finding. We conjecture that insufficient ITN coverage is the most likely explanation, and discuss implications for public health policy.
Accuracy Versus Falsification Costs: The Optimal Amount of Evidence under Different Procedures
- Journal of Law, Economics and Organization
, 2009
"... An arbiter can decide a case on the basis of his priors or he can ask for further evidence from the two parties to the conflict. The parties may misrepresent evidence in their favor at a cost. The arbiter is concerned about accuracy and low procedural costs. When both parties testify, each of the di ..."
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Cited by 9 (6 self)
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An arbiter can decide a case on the basis of his priors or he can ask for further evidence from the two parties to the conflict. The parties may misrepresent evidence in their favor at a cost. The arbiter is concerned about accuracy and low procedural costs. When both parties testify, each of the distorts the evidence less than when they testify alone. When the fixed cost of testifying is low, the arbiter hears both, for intermediate values one, and for high values no party at all. The arbiter’s ability to remain uninformed as well as sequential testifying makes it more likely that the arbiter requires evidence.
