Does Patient Demand Contribute to the Overuse of Prescription Drugs?

In an experiment in Mali, we tested whether patients pressure providers to prescribe unnecessary medical treatment. We varied patients’ information about a discount for antimalarial tablets and measure demand for both tablets and costlier antimalarial injections. We find evidence of patient-driven demand: informing patients about the discount, instead of letting providers decide to share this information, increased discount use by 35 percent and overall malaria treatment by 10 percent. These marginal patients rarely had malaria, worsening the illness-treatment match. Providers did not use the information advantage to sell injections—their use fell in both information conditions. (JEL D83, I11, I12, O15)

Organising Competition for the Market

We study competition for the market in a setting where incumbents (and, to a lesser extent, neighbouring incumbents) benefit from a cost or information advantage. We first compare the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find the timing of tenders interrelates with the likelihood of monopolisation. For high incumbency advantages and/or discount factors monopolisation is expected, in which case synchronous tendering is preferable as it strengthens the pressure that entrants exercise on the monopolist. For low incumbency advantages and/or discount factors other firms remain active, in which case staggered tendering is preferable as it maximises competitive pressure coming from the other firms. We use bus tendering in London to illustrate our insights and draw policy implications.

Investors’ Trading Activity and Information Asymmetry: Evidence from the Romanian Stock Market

This paper examines the problem of information asymmetry between foreign, local, institutional and individual investors on the Bucharest Stock Exchange (BVB) for the period 2004–2011. Using monthly returns for individual companies listed on BVB, stock market indices during the seven years period, as well as aggregate data on foreign and domestic investors (both institutional and individual) sales and purchases on the Romanian stock market, this research intends to provide an answer to the following question: Are foreign investors better informed than the domestic ones and continually achieve higher rates of return on the Romanian stock market? We compare the information advantage of the different investors’ categories by separating the stock in our data sample into two categories, namely blue-chips stocks (mostly stocks that are part of the BET index, and also containing one international stock, Erste Bank), and “regular” stocks. Subsequently, we study the explanatory power for stock returns of potential impact factors, which reflect the monthly net position of four groups of investors on the Romanian Stock market (Purchases-Sales) by employing multivariate regression models and a five variable VAR system. Ultimately, we are interested in whether investors in one particular category are consistently net buyers just before stock returns increase and are net sellers before stock returns decrease, thus suggesting they have an information advantage as compared to the domestic ones. Our aim is to provide robust empirical evidence on the nature of investors’ information asymmetry by utilising a unique data set and directly assessing relevant inter-relationships.

Is it all about appearance? Limited cognitive control and information advantage reveal self-serving reciprocity

Previous research on social preferences has found that reciprocal behavior is an automatic response, which requires less cognitive control than self-interested behavior. However, research on unethicality has demonstrated that cognitive control is required to resist the temptation to benefit from engaging in an unethical act, thus suggesting that self-interested behaviors are automatic. By manipulating information asymmetry (i.e., advantage) among trust game receivers, we examined whether the automatic tendency to positively reciprocate a kind gesture is driven by a genuine motivation to be fair, or whether it reflects a motivation to appear fair. In an equal-information condition, we replicated previous findings by showing that limited cognitive control, due to ego-depletion, promotes reciprocal behavior (Experiments 1 & 2). However, this effect did not replicate under time-constraint, an additional manipulation to limit cognitive control (Experiment 3). Importantly, in an advantaged-information condition, under ego-depletion (Experiments 1 & 2) or time-constraint (Experiments 3 & 4) manipulation, participants did not exhibit enhanced reciprocity. Rather, in three out of these four experiments, and as confirmed by a meta-analysis that additionally included a pilot experiment, participants exploited their information advantage and positively reciprocated to a lesser extent than participants whose cognitive control was intact. These results suggest that the automatic preference for reciprocity might be more driven by a self-serving motivation to appear (rather than to be) fair than is typically credited. We further discuss various other findings supporting the notion that what may appear as automatic pro-sociality may in fact reflect an automatic self-serving motivation of self-presentation

Media Freedom and the Escalation of State Violence

When governments face severe political violence, they regularly respond with violence. Yet not all governments escalate repression under such circumstances. We argue that to understand the escalation of state violence, we need to pay attention to the potential costs leaders might face in doing so. We expect that the decision to escalate state violence is conditional on being faced with heightened threats and on possessing an information advantage that mitigates the expected cost of increasing state violence. In an environment where media freedom is constrained, leaders can deny or reframe an escalation of violations and so expect to reduce potential domestic and international costs attached to that decision. Using a global dataset from 1981 to 2006, we show that state violence is likely to escalate in response to increasing violent threats to the state when media freedom is curtailed – but not when the media are free from state intervention. A media environment that the government knows is free to sound the alarm is associated with higher political costs of repression and effectively reduces the risk of escalating state violence, even in the face of mounting armed threats.