Showing papers on "Fixed price published in 1998"

Contracting for health services with unmonitored quality

Abstract: In both the NHS and Medicare, recent emphasis has been on contracts with payment based only on the ntumber of patients treated. It is shown that, withouit direct monitoring of quality or effort to reduce costs, stuch contracts are efficient only when it is efficient to treat all patients wanting treatment. It may not be when treatment costs are insured or stibsidised. Such contracts can then be improved by incltuding payments for the number of patients wanting treatment, as well as for the number actually treated. Even then, the otutcome will not generally be efficient if quality is multi-dimensional. In purchasing health services, government agencies, insurers and health maintenance organisations (HMOs) want to keep costs down without inducing providers of services to skimp on quality. By quality, we mean any aspect of service that benefits patients, whether during the process of treatment or in the health outcome after treatment. Typically, neither the provider's effort to reduce costs, nor the quality of service, is easily described in a way that makes specification in a contract straightforward, so the provider must be induced to supply both effort and quality. Contracting is thus what Holmstrom and Milgrom (1991) term a multitask agency problem. In both the British National Health Service (NHS) and US Medicare, recent emphasis has been on using contracts with payment based only on the number of patients treated (price-quantity schedules) for each specified medical condition and not on such additional information as the actual cost of treatment. Under Medicare, payment is (with certain exceptions) a fixed price per patient in each diagnosis related group (DRG). In the NHS, purchasers are encouraged to use fixed price contracts (known as cost per case contracts) or contracts with payment a non-linear function of the number of patients treated (cost and volume or sophisticated block contracts). National Audit Office (1995) summarises

Business negotiations on the Internet

Abstract: In this paper we explain the commonality in the structure of different price negotiation mechanisms such as fixed price sales, various forms of auctions, and brokerages. We then discuss the various kinds of auctions. Next we describe the steps of an auction process and the functionality required in each step. Finally, we briefly present the design elements of a generic auction application. Table of

Underpricing and Firm Quality in Initial Public Offerings: Evidence from Singapore

Abstract: Firms seeking initial public listings on the Stock Exchange of Singapore can choose between offering their shares at a fixed price or selling them in two tranches: the first tranche is offered at a fixed price while the issue price of the second tranche is determined via a tender system. Consistent with the existing signalling literature, tendering IPO firms underprice their fixed price tranche more than non-tendering IPO firms. The underpricing in the fixed tranche is recouped through higher proceeds from the tender tranche. Our evidence suggests that IPO firms use the tender option to signal superior firm quality.

Bookbuilding Versus Fixed Price: An Analysis of Competing Strategies for Marketing Ipos

Abstract: We compare two mechanisms for selling IPOs, the fixed price method and American bookbuilding, when investors have correlated information and can observe each other's subscription decisions. In this environment, the fixed price method is a strategy that can create cascading demand. Alternatively, an underwriter building a book aggregates investor information into the offer price. We find that bookbuilding generates higher expected proceeds but exposes the issuer to greater uncertainty, and that it provides the option to sell additional shares that are not underpriced on the margin.

Does Stock Price Elasticity Affect Corporate Financial Decisions

Abstract: This paper considers whether stock price elasticity affects corporate financial decisions Basic economic principles and the existing theoretical literature suggest that firms choosing the Dutch auction instead of the fixed price tender offer are those firms that expect to face greater stock price elasticity While the average realized elasticities of the firms conducting the various tender offers between 1984 and 1989 fail to be significantly different, multivariate econometric analysis suggests that firms choosing the Dutch auction instead of the fixed price tender offer are indeed those firms that expect to face greater stock elasticity The expected elasticity remains an important determinant of the tender offer choice even when allowing for firm characteristics associated with the choice of repurchase method Firms facing greater elasticity are also characterized The findings suggest that expected stock price elasticity may be an important determinant of corporate financial decisions that affect the supply of or demand for stock

Reputation and Honesty in a Market for Information

Abstract: Previous works on asymmetric information in asset markets tend to focus on the potential gains in the asset market itself. We focus on the market for information and conduct an experimental study to explore, in a game of finite but uncertain duration, whether reputation can be an effective constraint on deliberate misinformation. At the beginning of each period, an uninformed potential asset buyer can purchase information, at a fixed price and from a fully-informed source, about the value of the asset in that period. The informational insiders cannot purchase the asset and are given short-term incentives to provide false information when the asset value is low. Our model predicts that, in accordance with the Folk Theorem, Pareto-superior outcomes featuring truthful revelation should be sustainable. However, this depends critically on beliefs about rationality and behavior. We find that, overall, sellers are truthful 89% of the time. More significantly, the observed frequency of truthfulness is 81% when the asset value is low. Our result is consistent with both mixed-strategy and trigger strategy interpretations and provides evidence that most subjects correctly anticipate rational behavior. We discuss applications to financial markets, media regulation, and the stability of cartels.