Pub Owners Support Minimum Alcohol Prices

The Economist reports on the UK's consideration of introducing a minimum price for alcohol. Not surprisingly, the idea is supported by medical associations and the police. The policy is also supported by pub owners, which initially seems a bit odd. The explanation: prices in pubs are already above the proposed minimum price, so the floor would only affect sales made in competing outlets like grocery stores.

Using Behavioral Economics to motivate workers

If you are going to adopt incentive compensation, try the following.  Instead of promising workers increased pay for performance, tell them that they have been "provisionally" awarded a bonus, but that the bonus will be taken away if they do not perform.  As predicted by prospect theory,

The fear of loss was a better motivator than the prospect of gain (which worked too, but less well). And the difference persisted over time: the results were not simply a consequence of workers’ misunderstanding of the system. Economists have always been advocates of using carrots and sticks. But they may not have emphasised appearances enough. Carrots, this research suggests, may work better if they can somehow be made to look like sticks.

Democrat's Senate futures take big dive

On Intrade, prices of Coakley futures fell to $0.45.

UPDATE:  now at $0.30.

More on Increasing Organ Donations

Around 100,000 people in the United States are currently on waiting lists for organ donation. In today's WSJ, Alex Tabarrok discusses ways different countries around the world are tackling the organ donor shortage.

More Evidence for the EMH?

Lusha, a chimpanzee in a Moscow circus, outperformed 94% of the country's investment funds over the last year.

Somebody better give Lusha a huge bonus or the circus might not be able to retain her talent.
(HT: NYT Economix blog)

Support for the EMH from the Most Unlikely Place

Understandably, faith in the Efficient Market Hypothesis (EMH) has wavered recently due to a spate of bursting bubbles. This has rekindled the EMH debate loosely defined as between Chicago and Harvard. But Harvard's "elite" repeatedly guessing wrong about market swings - and billions of dollars wrong - may be the best recent evidence in support of the EMH.

Information and Prices

Soybean farmers in the Indian state of Madhya Pradesh sell their products in open auctions to intermediaries, who then re-sell to food processing companies. Because each market tended to have only a few intermediaries, it was relatively easy for them to collude to pay lower prices. The farmers had little access to prices being paid by the food processing companies or by intermediaries in other markets.

So what happened when internet kiosks that show prices in nearby markets were introduced into the markets? Prices went up (around 1.7% on average) - here's (pdf) a presentation by the study author and an article from the Economist.

What wasn't entirely clear to me was the incentives of the kiosk provider. The kiosks were provided by one of the food processing companies. Part of the motivation seemed to be to bypass the intermediaries but that doesn't really explain provision of the kiosks with nearby market prices.

Endogenous Propoerty Rights - Gnarly Dude

I wish I thought of this - "Quality and the Commons: The Surf Gangs of California." Growing up in So Cal, it was always clear that non-locals had better steer clear of the best surf spots when the waves were up. I was not a surfer, but half of my high school water polo team was. When the surf was up, we could not have a decent practice because they all ditched school to go surf. Since we were inland a few miles, they were non-locals and would come back with stories of the fights they got into with the locals. Of course, this notion was succinctly summed up in Oingo Boingo's My Beach" and My Wave" decades ago.

Its the incentives, stupid.

Almost everyone knows that health care costs decrease when patient co-pays go up.  So why is IBM  eliminating them?

Big Blue has gone whole hog in eliminating primary care co-pays for most of its 115,000 U.S. employees. And notwithstanding the company's concern for employee health, it's betting that the action will yield positive numbers on its employee health insurance balance sheet.

Maybe they are doubling down on their investments in wellness programs. If theirs works as claimed, it would be the first.

The primary care copay waive is in character for IBM. It invested $79 million in wellness programs between 2004 and 2007, saving about $191 million in health-related costs, according to an announcement. It has also participated in patient-centered medical home initiatives. And it has been covering preventive care at 100% since 2006.

Expected inflation rising

From Laffer Associates: