an economic theory of self control the concept of self control is incorporated in a theory of individual intertemporal choice by modeling the individual as an organization the individual at a point in time is assumed to be both a farsighted planner and a myopic doer the resulting conflict is seen to be fundamentally similar to the agency conflict between the owners and managers of a firm both individuals and firms use the same techniques to mitigate the problems which the conflicts create this paper stresses the implications of this agency model and discusses as applications the effect of pensions on saving saving and the timing of income flows and individual discount rates

the strategic interaction between firms and formulary committees effects on the prices of new drugs we study the strategic interaction between the pricing decisions of a pharmaceutical firm and the reimbursement decisions of a government agency which grants reimbursement rights to patients for whom new drugs are most cost effective if the reimbursement decision precedes pricing the agency only reimburses some patients if the drug s private and public health benefits diverge this is there are consumption externalities and the variable cost of the drug exceeds the alternative s contrarily if the firm can commit to a price before reimbursement a strategic effect implies that by setting a sufficiently high price the firm can make the agency more willing to reimburse than without commitment

cities regions and competitiveness turok i 2004 cities regions and competitiveness regional studies38 1061 1075 competitiveness is a complex concept used in a variety of ways and contexts the paper reviews some of the main ideas particularly as they apply to cities and regions its definition should include the relative position of a region s firms in external markets the productivity of local resources and the extent to which they are used competition takes both an institutionalized form local public agencies competing overtly for investment and other resources and more importantly a less organized form involving firms trading in wider markets there are two contrasting perspectives on the competitive advantages of city regions one emphasizes the benefits of scale and diversity that flow from concentrations of economic activity the other stresses the quality of the interactions between firms and supporting institutions recent studies suggest that the significance of localized business networks or clusters might be exagge

monopoly pricing with negative network effects the case of vaccines abstract we study the market for vaccinations considering income heterogeneity on the demand side and monopoly power on the supply side a monopolist has an incentive to exploit the external effect of vaccinations and leave the poor susceptible in order to increase the willingness to pay the rich even the possibility of price discrimination does not remove this incentive we demonstrate that the weaknesses of standard policy measures are mitigated when income heterogeneity is taken into account this offers an efficiency based rationale for distribution oriented national or international public health interventions

micro targeting and polarization abstract this paper connects the rise in polarization to changes in media technology which allow for higher precision in the advertising strategy of candidates candidates place ads in media outlets whose audiences differ in ideology and size we develop the concept of media centrality which takes into account differences in the media network and in ideology media centrality leads to a simple characterization of both the optimal targeting strategy and policy we show that generally a more fragmented media landscape leads to an increase in polarization

innovation in europe a tale of networks knowledge and trade in five cities this paper identifies four groups of theory that seek to explain the relationships between innovation and space these are traditional agglomeration theory networking learning and new competitiveness theory evidence on the last three most recent theories is sought by analysing the results of comparable surveys of innovative firms in amsterdam london milan paris and stuttgart the empirical results show that differences occur in the external relationships between firms and the global economy with respect to specific innovation projects broadly speaking the main differences identified show that in regional cities such as stuttgart and milan innovative activities are more linked to their regional and national economies than they are in the international world cities such as paris and london this suggests that attempts to generalize the network paradigm on industrial production are premature at least as far as innovation is concerned conversely the data demonstrate the significance of trading syste

interaction protection and epidemics abstract individuals respond to the risk of contagious infections by restricting interaction and by investing in protection we develop a model that examines the trade off between these two actions and the consequences for infection rates there exists a unique equilibrium individuals who invest in protection choose to interact more relative to those who do not invest in protection changes in the contagiousness of the disease have non monotonic effects as a result interaction initially falls and then rises while infection rates too may initial increase and then decline we then consider a society with two communities that differ in their returns from interaction high and low individuals in isolated communities exhibit different behavior the high community has a higher rate of protection and interaction and a lower rate of infection integration amplifies these differences

the control of invasive species on private property with neighbor to neighbor spillovers invasive pests cross property boundaries property managers may have private incentives to control invasive species despite not having sufficient incentive to fully internalize the external costs of their role in spreading the invasion each property manager has a right to future use of his own property but his property may abut others properties enabling spread of an invasive species the incentives for a foresighted property manager to control invasive species have received little attention we consider the efforts of a foresighted property manager who has rights to future use of a property and has the ability to engage in repeated discrete control activities we find that higher rates of dispersal associated with proximity to neighboring properties reduce the private incentives for control controlling species at one location provides incentives to control at a neighboring location control at neighboring locations are strategic complements and coupled with spatial heterogeneity lead to a weaker link public good problem in which each property owner is unable to fully appropriate the benefits of his own control activity future use rights and private costs suggest that there is scope for a series of coase like exchanges to internalize much of the costs associated with species invasion pigouvian taxes on invasive species potentially have qualitatively perverse behavioral effects a tax with a strong income effect e g failure of effective revenue recycling can reduce the value of property assets and diminish the incentive to manage insects on one s own property

integrating behavioral choice into epidemiological models of aids increased hiv risk creates incentives for people with low sexual activity to reduce their activity but may make high activity people fatalistic leading them to reduce their activity only slightly or actually increase it if high activity people reduce their activity by a smaller proportion than low activity people the composition of the pool of available partners will worsen creating positive feedbacks and possibly multiple steady states early public health efforts may allow societies to reach more favorable steady states excerpt

emergent complexity in agent based computational economics abstract in this paper we shall review two kinds of emergent complexity in agent based computational economics ace the first kind is based on the complex systems initiated in the 1980s or even earlier by mathematicians and physicists whereas the second kind is based on the idea of complex adaptive systems composed of autonomous agents for which many representative works have been collected in rosser for the latter we shall go further to examine the two elements which have just recently been incorporated in agent based economic modelling namely intelligence and modularity this augmentation leads to the development of neurocognitive software agents which can guide the generation and direction of future ace studies with a multistage brain behaviour to emergency to brain behaviour approach

risk and rationalization the role of affect and cognitive dissonance for sexual risk taking this paper analyzes the mechanisms underlying excessive sexual risk taking in the presence of hiv drawing ideas from psychology on decision making processes and risk evaluation a theoretical mode

non adherence to a low fat diet an economic perspective abstract despite bearing increased risk of suffering a heart attack failure to adhere to a low fat dietary regimen is wide spread the paper applies an expected utility maximization model to inquire into the individual s decision to deviate from a prescribed low fat diet offering an economic explanation for excess high fat consumption the implications of self protection against the risk of dying from an attack are further examined the analysis reveals that self protection and dietary adherence can be complements suggesting that public health policy may help reduce both the risk of an attack and the risk of dying from an attack through providing incentives for self protection

optimal tax subsidy combinations for the flu season this paper uses a dynamic susceptible infected recovered sir epidemic model to identify optimal vaccination policy mixes for the flu season it begins with the solution to the relevant optimal control problem and then gives the derivation of a perfect foresight equilibrium outcome for vaccination behavior in an unregulated market both the optimal and market outcomes are characterized by switching curves in s i state space exact expressions for these are derived the final section discusses taxes and subsidies that can be used to attain the optimal outcome

market structure and communicable diseases communicable diseases pose a formidable challenge for public policy using numerical simulations we show under which scenarios a monopolist s price and prevalence paths converge to a non zero steady state in contrast a planner typically eradicates the disease if eradication is impossible the planner subsidizes treatments as long as the prevalence can be controlled drug resistance exacerbates the welfare difference between monopoly and first best outcomes nevertheless because the negative externalities from resistance compete with the positive externalities of treatment a mixed competition monopoly regime may perform better than competition alone this result has important implications for the design of many drug patents les maladies contagieuses posent un defi important a la politique publique a l aide de simulations numeriques on montre dans quels scenarios les prix de monopole et le sentier de prevalence tendent a engendrer un regime permanent ou la maladie ne disparait pas un planificateur typiquement elimine la maladie si l eradication est impossible le planificateur subventionne les traitements aussi longtemps que la prevalence peut etre controlee la resistance au remede agrandit l ecart de bien etre entre le cas du monopole et l optimum cependant comme les effets externes negatifs de la resistance au traitement sont en conflit avec les effets externes positifs des traitements un regime mixte concurrence monopole peut donner de meilleurs resultats que la seule concurrence ce resultat a des implications importantes pour l elaboration de nombreux brevets pharmaceutiques

affective decision making a theory of optimism bias abstract optimism bias is inconsistent with the independence of decision weights and payoffs found in models of choice under risk and uncertainty such as expected utility theory subjective expected utility and prospect theory we therefore propose an alternative model of risky and uncertain choice where decision weights affective or perceived risk are endogenous affective decision making adm is a strategic model of choice under risk and uncertainty where we posit two cognitive processes the rational and the emotional process the two processes interact in a simultaneous move intrapersonal potential game and observed choice is the result of a pure strategy nash equilibrium in this game we show that regular adm potential games have an odd number of locally unique pure strategy nash equilibria and demonstrate this finding for affective decision making in insurance markets we prove that adm potential games are refutable by axiomatizing the adm potential maximizers

addiction and cue triggered decision processes we propose a model of addiction based on three premises 1 use among addicts is frequently a mistake 2 experience sensitizes an individual to environmental cues that trigger mistaken usage 3 addicts understand and manage their susceptibilities we argue that these premises find support in evidence from psychology neuroscience and clinical practice the model is tractable and generates a plausible mapping between behavior and the characteristics of the user substance and environment it accounts for a number of important patterns associated with addiction gives rise to a clear welfare standard and has novel implications for policy

public control of rational and unpredictable epidemics abstract efforts to improve disease forecasting are often justified on the grounds that accurate and reliable forecasts offer opportunities to improve response to epidemics yet little is known about how disease forecasts influence the responsiveness to public health interventions this paper couples an optimal stopping model and rational disease prevention with a stochastic compartmental epidemiological model of disease spread to develop a framework for evaluating the timing of public health interventions in response to rational but unpredictable epidemics optimal behavior by a public health agency is characterized by a pair of critical prevalence thresholds that trigger implementation and suspension of a public prevention program unlike existing economic thresholds for disease prevention our decision thresholds account for time varying probabilities of different levels of infection prevention by private individuals and the likelihood of crossing epidemiological thresholds that determine disease persistence

network security and contagion abstract we develop a theoretical model of security investments in a network of interconnected agents network connections introduce the possibility of cascading failures due to an exogenous or endogenous attack depending on the profile of security investments by the agents we provide a tractable decomposition of individual payoffs into an own effect and an externality which also enables us to characterize individual investment incentives recursively by considering the network with one agent removed at a time using this decomposition we provide characterization of equilibrium and socially optimal investment levels as a function of the structure of the network highlighting the role of a new set of network centrality measures in shaping the levels of equilibrium and optimal investments when the attack location is endogenized by assuming that the attacker chooses a probability distribution over the location of the attack in order to maximize damage similar forces still operate but now because greater investment by an agent shifts the attack to other parts of the network the equilibrium may involve too much investment relative to the social optimum

a dual self model of impulse control we propose that a simple dual self model gives a unified explanation for several empirical regularities including the apparent time inconsistency that has motivated models of quasi hyperbolic discounting and rabin s paradox of risk aversion in the large and small the model also implies that self control costs imply excess delay as in the o donoghue and rabin models of quasi hyperbolic utility and it explains experimental evidence that increased cognitive load makes temptations harder to resist the base version of our model is consistent with the gul pesendorfer axioms but we argue that these axioms must be relaxed to account for the effect of cognitive load

global disease eradication an infectious disease can only be eradicated globally if it is eliminated in every country but does this require only international coordination or does it require cooperation using a model that blends epidemiology economics and game theory this paper shows that coordination will not always suffice even when the global benefits of eradication exceed the costs in general eradication will require strong international institutions jel h41 i18 k33 o19

consumption externality and yield uncertainty in the influenza vaccine supply chain interventions in demand and supply sides we study the impact of yield uncertainty supply side and self interested consumers demand side on the inefficiency in the influenza vaccine supply chain previous economic studies focusing on demand side find that the equilibrium demand is always less than the socially optimal demand because self interested individuals do not internalize the social benefit of protecting others via reduced infectiousness positive externality in contrast we show that the equilibrium demand can be greater than the socially optimal demand after accounting for the limited supply due to yield uncertainty and manufacturer s incentives the main driver for this result is a second negative externality self interested individuals ignore that vaccinating people with high infection costs is more beneficial for the society when supply is limited we show that the extent of the negative externality can be reduced through more efficient and less uncertain allocation mechanisms to investigate the relative effectiveness of government interventions on supply and demand sides under various demand and supply characteristics we construct two partially centralized scenarios where the social planner i e government intervenes either on the demand side or the supply side but not both we conduct an extensive numerical analysis this paper was accepted by yossi aviv operations management

european cities in the knowledge economy towards a typology the shift towards a knowledge based economy seems to favour some well endowed urban areas however not all cities benefit equally this paper discusses the shift towards a knowledge based economy

private eradication of mobile public bads we consider analytically the non cooperative behavior of many private property owners who each controls the stock of a public bad such as an invasive weed species infectious disease fire or agricultural pest the stock of the public bad can grow and disperse across a spatial domain of arbitrary size in this setting we characterize the conditions under which private property owners will control or eradicate and determine how this decision depends on property specific environmental features and on the behavior of other landowners we show that high mobility or lower control by others result in lower private control but when the marginal dynamic cost of the bad is sufficiently large we find that complete eradication may be privately optimal despite the lack of consideration of others welfare in these cases eradication arises in the non cooperative game and is also socially optimal so there is in effect no externality finally when property harboring the bad is not owned or is owned in common we derive the side payments required to efficiently control the mobile public bad

theories of the mind economics has traditionally relied on revealed preferences and occasionally on verbal reports to understand the desires of people another source of information has been developed in recent years the direct observation of choice processes this mechanism possible thanks to the improvements in the designs and techniques to measure brain activity is explored in the bur geoning field of experimental neuroeconom ics see paul w glimcher and aldo rustichini 2004 and colin camerer george loewenstein and drazen prelec 2005 for recent surveys in this article we argue that the evidence on brain activity can also be used to build theo retical models that help us understand choices and predict behaviors we label this research neuroeconomic theory in section i we describe the procedure discuss some advan tages over traditional methodologies and estab lish some facts that motivate our approach in section ii we illustrate the methodology with two brain based models of decision making i what is neuroeconomic theory neuroeconomic theory is an interdisciplin ary line of investigation that combines research from neuroscience neurobiology and econom ics experimental neuroscience and neurobiology provide detailed evidence of the functionality interconnectivity and physiological constraints of the brain systems involved in decision making microeconomic theory supplies the toolkit to build simple optimization models that incorporate these network interactions and well defined con straints into the mechanisms of choice

scientific labour markets networks and regional innovation systems lawton smith h and waters r scientific labour markets networks and regional innovation systems regional studies while quality of the labour force in a locality is the single most important component of local competitiveness the regional innovation systems literature has relatively neglected processes of labour force development this paper addresses two questions what is the role of labour markets in the making of regions as innovative systems and what is the role of labour markets in regional innovation systems the labour market and specifically the networks that exist between highly skilled workers are positioned at the centre of the analysis using evidence from the uk high technology economies of cambridgeshire and oxfordshire lawton smith h and waters r lawton smith h et wat

tax subsidy policies toward vector borne infectious diseases abstract vector borne diseases especially rife in poor countries pose sectoral tax subsidy issues preventions and therapies mitigate these diseases in a numerical optimization model combining dynamic epidemiology and economics the medical distinction between prevention and therapy does not distinguish economic properties of preventions and therapies some interventions increase and others decrease moving to the steady state depending on the utility function the targeting of interventions and the disease process interventions display negative own price but indeterminate cross price effects juxtaposing the social planner s with decentralized choices quantifies externalities and shows how subsidies implement the first best one prevention and the therapy are equally subsidized

a journey without maps the regional policies of the 1964 70 british labour government o hara g 2005 a journey without maps the regional policies of the 1964 70 british labour government regional studies 39 1183 1195 this paper examines four influences on british regional policy in the late 1960s party politics in the context of the economic environment the structure of government the influence of the new regional economics and the impact of new knowledge and statistics much of the confusion of british regional policies in the 1960s is found to have been due to political and administrative divisions allowed by the fact that new theoretical approaches and data were so novel and uncertain policies are therefore advocated that are based on established research clearly and simply defined and determined democratically within regions themselves

equilibrium vaccination patterns in incomplete and heterogeneous networks abstract under vaccination is a usual concern of disease control studies but this paper employs a simultaneous move game in a three agent contagion network to show that it is only one of the three inefficient patterns when the network structure is incomplete or individual characteristics are heterogeneous there exist new types of nash equilibrium outcomes with either the right number but wrong set of people getting vaccinated or too many vaccinations and these equilibria are robust to standard refinements while untargeted policies can correct the standard under vaccination problem targeted policies are more palatable for correcting the new inefficiencies universal mandates can never improve on any nash equilibria

technological improvements in vaccine efficacy and individual incentive to vaccinate abstract a more efficacious vaccine has two opposing effects namely the direct effect and the indirect effect on each individual s incentive to vaccinate technological improvements in vaccine efficacy may thus reduce each individual s incentive to vaccinate

network software security and user incentives we study the effect of user incentives on software security in a network of individual users under costly patching and negative network security externalities for proprietary software or freeware we compare four alternative policies to manage network security i consumer self patching where no external incentives are provided for patching or purchasing ii mandatory patching iii patching rebate and iv usage tax we show that for proprietary software when the software security risk and the patching costs are high for both a welfare maximizing social planner and a profit maximizing vendor a patching rebate dominates the other policies however when the patching cost or the security risk is low self patching is best we also show that when a rebate is effective the profit maximizing rebate is decreasing in the security risk and increasing in patching costs the welfare maximizing rebates are also increasing in patching costs but can be increasing in the effective security risk when patching costs are high for freeware a usage tax is the most effective policy except when both patching costs and security risk are low in which case a patching rebate prevails optimal patching rebates and taxes tend to increase with increased security risk and patching costs but can decrease in the security risk for high risk levels our results suggest that both the value generated from software and vendor profits can be significantly improved by mechanisms that target user incentives to maintain software security

making friends or making things interfirm transactions in the sheffield metal working cluster the paper comprises an examination of the material inputs of a sample of 70 small firms in the sheffield metal working cluster and an assessment of the extent to which purchases are accompanied by face to face embodied transactions it is shown that there are no significant differences between the level of embodied transactions accompanying local intra cluster material links and those associated with non local flows it seems that on this measure at least and within this cluster the sheffield metal working cluster lacks the dense network of embodied transactions with local suppliers suggested in the wider literature the lower than expected measures of embodied transactions suggest that one of the mechanisms for the transfer of knowledge between buyers and suppliers within an industrial cluster is poorly developed in this particular case

externalities and compulsary vaccinations abstract this paper challenges the conventional wisdom that because of the free rider problem a case can be made for compulsary vaccination against infectious disease for a very general class of models requiring that all individuals be vaccinated is strictly dominated by free choice the market allocation is not optimum and in the full information optimum some individuals would be compelled to be vaccinated this allocation can be achieved by taxes and subsidies however the government can exploit the revelation properties of vaccination and achieve an even better allocation than the full information optimum

dynamic epidemiology and the market for vaccinations abstract the intent of this paper is to raise the question of how and when externalities can arise in the market for vaccinations static and dynamic models of such markets are developed and compared a special case in a continuous time dynamic framework is examined and is found to be efficient i e there is no externality this is in contrast to the results from the static formulation raising doubts about the suitability of a static approach these results indicate that the question of whether there are externalities in individual immunization decisions is more involved than is generally supposed

the brain as a hierarchical organization based on recent neuroscience evidence we model the brain as a dual system organization subject to three conflicts asymmetric information temporal hori zon and incentive salience under the first and second conflicts we show that the uninformed system imposes a positive link between consumption and labor at every period furthermore decreasing impatience endogenously emerges as a consequence of these two conflicts under the first and third conflicts it becomes optimal to set a consumption cap finally we discuss the behavioral implications of these rules for choice bracketing and expense tracking and for consumption over the life cycle jel dil d74 d82 d87 d91

preference heterogeneity in the structural estimation of efficient pigovian incentives for insecticide spraying to reduce malaria this paper bridges the theoretical and empirical literatures on the role of preference heterogeneity in characterizing externalities related to disease transmission we use a theoretical structure similar to locational sorting models which characterize equilibria in terms of marginal individuals who are indifferent between locations in our case the locations are binary consisting of whether or not to take a discrete preventative action individual heterogeneity arises in this structure due to variation in the costs and disutility associated with prevention we demonstrate application of this approach in the context of participation in insecticide based indoor residual spraying programs for malaria control in northern uganda we identify the parameters of our theoretical model using a stated preference choice experiment combined with estimates from published epidemiological studies the model implies that pigovian subsidies for participation in this context should decrease household malaria risk by 19 25 our approach can be applied to other bioeconomic externalities with spillovers from discrete preventative actions including agricultural pest management and the control of pest infestations and invasive species

preventives versus treatments preventives are sold ex ante before disease status is realized while treatments are sold ex post even if the mean of the ex ante distribution of consumer values is the same as that ex post the shape of the distributions may differ generating a difference between the surplus each product can extract if for example consumers differ only in ex ante disease risk then a monopolist would have more difficulty extracting surplus with a preventive than with a treatment because treatment consumers having contracted the disease no longer differ in disease risk we show that the ratio of preventive to treatment producer surplus can be arbitrarily small in particular when the distribution of consumer values has a zipf shape and the disease is rare the firm s bias toward treatments can be reversed for example if the source of private information is disease severity learned ex post the difference between the producer surplus earned from the products can result in distorted rd the deadweight loss from this distortion can be as large as the entire producer surplus difference calibrations for hiv and heart attacks based on risk factors in the u s population suggest that the distribution of disease risk is sufficiently zipf similar to generate substantial differences between producer surplus from preventives and treatments empirically we find that proxies for the zipf similarity of the disease risk distribution are associated a significantly lower likelihood of vaccine development but not drug development jel codes o31 l11 i18 d42

innovation and cooperation in the small firm sector evidence from northern britain freel m s and harrison r t 2006 innovation and cooperation in the small firm sector evidence from northern britain regional studies 40 289 305 over the last 20 years network based models of innovation led economic development have grown increasingly popular to both the polity and the academy in contrast to earlier linear conceptions innovation is viewed as a systemic phenomenon in which interactive learning and cooperative entrepreneurship are fundamental the way that systems and in turn networks are usually defined is by the volume and characteristics of the linkages that bind them together accordingly drawing upon a recent survey of small firms in scotland and northern england 1347 responses the paper is concerned with mapping the extent of small firm innovation related networking and understanding the unique contribution such networks make to the successful introduction of new products and processes importantly it investigated the impact of networking on innovation in both manu