TY - JOUR AB - We study how competition between physicians affects the provision of medical care. In our theoretical model, physicians are faced with a heterogeneous patient population, in which patients systematically vary with regard to both their responsiveness to the provided quality of care and their state of health. We test the behavioral predictions derived from this model in a controlled laboratory experiment. In line with the model, we observe that competition significantly improves patient benefits as long as patients are able to respond to the quality provided. For those patients, who are not able to choose a physician, competition even decreases the patient benefit compared to a situation without competition. This decrease is in contrast to our theoretical prediction implying no change in benefits for passive patients. Deviations from patient-optimal treatment are highest for passive patients in need of a low quantity of medical services. With repetition, both, the positive effects of competition for active patients as well as the negative effects of competition for passive patients become more pronounced. Our results imply that competition can not only improve but also worsen patient outcome and that patients’ responsiveness to quality is decisive. AU - Brosig-Koch, Jeannette AU - Hehenkamp, Burkhard AU - Kokot, Johanna ID - 44092 JF - Health Economics KW - physician competition KW - patient characteristics KW - heterogeneity in quality responses KW - fee-for-service KW - laboratory experiment TI - Who benefits from quality competition in health care? A theory and a laboratory experiment on the relevance of patient characteristics ER - TY - GEN AB - We consider a model where for-profit providers compete in quality in a price-regulated market that has been opened to competition, and where the incumbent is located at the center of the market, facing high costs of relocation. The model is relevant in markets such as public health care, education and schooling, or postal services. We find that, when the regulated price is low or intermediate, the entrant strategically locates towards the corner of the market to keep the incumbent at the low monopoly quality level. For a high price, the entrant locates at the corner of the market and both providers implement higher quality compared to a monopoly. In any case, the entrant implements higher quality than the incumbent provider. Social welfare is always higher in a duopoly if the cost of quality is low. For higher cost levels welfare is non-monotonic in the price and it can be optimal to the regulator not to use its entire budget. Therefore, the welfare effect of entry depends on the price and the size of the entry cost, and the regulator should condition the decision to allow entry on an assessment of the entry cost. AU - Hehenkamp, Burkhard AU - Kaarbøe, Oddvar M. ID - 44093 KW - Quality competition KW - Price regulation KW - Location choice KW - Product differentiation TI - Price Regulation, Quality Competition and Location Choice with Costly Relocation ER - TY - CHAP AU - Haake, Claus-Jochen AU - Hehenkamp, Burkhard AU - Polevoy, Gleb ED - Haake, Claus-Jochen ED - Meyer auf der Heide, Friedhelm ED - Platzner, Marco ED - Wachsmuth, Henning ED - Wehrheim, Heike ID - 45878 T2 - On-The-Fly Computing -- Individualized IT-services in dynamic markets TI - The Market for Services: Incentives, Algorithms, Implementation VL - 412 ER - TY - BOOK AB - In the proposal for our CRC in 2011, we formulated a vision of markets for IT services that describes an approach to the provision of such services that was novel at that time and, to a large extent, remains so today: „Our vision of on-the-fly computing is that of IT services individually and automatically configured and brought to execution from flexibly combinable services traded on markets. At the same time, we aim at organizing markets whose participants maintain a lively market of services through appropriate entrepreneurial actions.“ Over the last 12 years, we have developed methods and techniques to address problems critical to the convenient, efficient, and secure use of on-the-fly computing. Among other things, we have made the description of services more convenient by allowing natural language input, increased the quality of configured services through (natural language) interaction and more efficient configuration processes and analysis procedures, made the quality of (the products of) providers in the marketplace transparent through reputation systems, and increased the resource efficiency of execution through reconfigurable heterogeneous computing nodes and an integrated treatment of service description and configuration. We have also developed network infrastructures that have a high degree of adaptivity, scalability, efficiency, and reliability, and provide cryptographic guarantees of anonymity and security for market participants and their products and services. To demonstrate the pervasiveness of the OTF computing approach, we have implemented a proof-of-concept for OTF computing that can run typical scenarios of an OTF market. We illustrated the approach using a cutting-edge application scenario – automated machine learning (AutoML). Finally, we have been pushing our work for the perpetuation of On-The-Fly Computing beyond the SFB and sharing the expertise gained in the SFB in events with industry partners as well as transfer projects. This work required a broad spectrum of expertise. Computer scientists and economists with research interests such as computer networks and distributed algorithms, security and cryptography, software engineering and verification, configuration and machine learning, computer engineering and HPC, microeconomics and game theory, business informatics and management have successfully collaborated here. AU - Haake, Claus-Jochen AU - Meyer auf der Heide, Friedhelm AU - Platzner, Marco AU - Wachsmuth, Henning AU - Wehrheim, Heike ID - 45863 TI - On-The-Fly Computing -- Individualized IT-services in dynamic markets VL - 412 ER - TY - JOUR AB - Qualitative comparative analysis (QCA) enables researchers in international management to better understand how the impact of a single explanatory factor depends on the context of other factors. But the analytical toolbox of QCA does not include a parameter for the explanatory power of a single explanatory factor or “condition”. In this paper, we therefore reinterpret the Banzhaf power index, originally developed in cooperative game theory, to establish a goodness-of-fit parameter in QCA. The relative Banzhaf index we suggest measures the explanatory power of one condition averaged across all sufficient combinations of conditions. The paper argues that the index is especially informative in three situations that are all salient in international management and call for a context-sensitive analysis of single conditions, namely substantial limited diversity in the data, the emergence of strong INUS conditions in the analysis, and theorizing with contingency factors. The paper derives the properties of the relative Banzhaf index in QCA, demonstrates how the index can be computed easily from a rudimentary truth table, and explores its insights by revisiting selected papers in international management that apply fuzzy-set QCA. It finally suggests a three-step procedure for utilizing the relative Banzhaf index when the causal structure involves both contingency effects and configurational causation. AU - Haake, Claus-Jochen AU - Schneider, Martin ID - 34114 JF - Journal of International Management KW - Qualitative comparative analysis KW - Banzhaf power index KW - causality KW - explanatory power TI - Playing games with QCA: Measuring the explanatory power of single conditions with the Banzhaf index ER - TY - JOUR AU - Hoyer, Britta AU - van Straaten, Dirk ID - 30341 JF - Journal of Behavioral and Experimental Economics KW - General Social Sciences KW - Economics and Econometrics KW - Applied Psychology SN - 2214-8043 TI - Anonymity and Self-Expression in Online Rating Systems - An Experimental Analysis VL - 98 ER - TY - GEN AB - We study the consequences of modeling asymmetric bargaining power in two-person bargaining problems. Comparing application of an asymmetric version of a bargaining solution to an upfront modification of the disagreement point, the resulting distortion crucially depends on the bargaining solution concept. While for the Kalai-Smorodinsky solution weaker players benefit from modifying the disagreement point, the situation is reversed for the Nash bargaining solution. There, weaker players are better off in the asymmetric bargaining solution. When comparing application of the asymmetric versions of the Nash and the Kalai-Smorodinsky solutions, we demonstrate that there is an upper bound for the weight of a player, so that she is better off with the Nash bargaining solution. This threshold is ultimately determined by the relative utilitarian bargaining solution. From a mechanism design perspective, our results provide valuable information for a social planner, when implementing a bargaining solution for unequally powerful players. AU - Haake, Claus-Jochen AU - Streck, Thomas ID - 32106 KW - Asymmetric bargaining power KW - Nash bargaining solution KW - Kalai-Smorodinsky bargaining solution TI - Distortion through modeling asymmetric bargaining power VL - 148 ER - TY - JOUR AU - Hoyer, Britta AU - De Jaegher, Kris ID - 31881 JF - International Journal of Game Theory TI - Network Disruption and the Common-Enemy Effect ER - TY - GEN AB - We study the effects of product differentiation on the bundling incentives of a two-product retailer. Two monopolistic manufacturers each produce a differentiated good. One sells it to both retailers, while the other only supplies a single retailer. Retailers compete in prices. Retail bundling is profitable when the goods are close substitutes. Only then is competition so intense that the retailer uses bundling to relax competition both within and across product markets, despite an aggravation of the double marginalization problem. Our asymmetric market structure arises endogenously for the case of close substitutes. In this case, bundling reduces social welfare. AU - Endres-Fröhlich, Angelika Elfriede AU - Hehenkamp, Burkhard AU - Heinzel, Joachim ID - 44091 KW - Retail bundling KW - upstream market power KW - double marginalization KW - product differentiation TI - The Impact of Product Differentiation on Retail Bundling in a Vertical Market ER - TY - JOUR AB - We analyse the two-dimensional Nash bargaining solution (NBS) by deploying the standard labour market negotiations model of McDonald and Solow (1981). We show that the two-dimensional bargaining problem can be decomposed into two one-dimensional problems, such that the two solutions together replicate the solution of the two-dimensional problem if the NBS is applied. The axiom of Independence of Irrelevant Alternatives is shown to be crucial for this type of decomposability. This result has significant implications for actual negotiations because it allows for the decomposition of a multi-dimensional bargaining problem into one-dimensional problems---and thus helps to facilitate real-world negotiations. AU - Haake, Claus-Jochen AU - Upmann, Thorsten AU - Duman, Papatya ID - 30940 IS - 2 JF - Scandinavian Journal of Economics KW - Labour market negotiations KW - efficient bargains KW - Nash bargaining solution KW - sequential bargaining KW - restricted bargaining games TI - Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining VL - 125 ER - TY - JOUR AB - AbstractIn this article we combine Debreu’s (Proc Natl Acad Sci 38(10):886–893, 1952) social system with Hurwicz’s (Econ Design 1(1):1–14, 1994; Am Econ Rev 98(3):577–585, 2008) ideas of embedding a “desired” game form into a “natural” game form that includes all feasible behavior, even if it is “illegal” according to the desired form. For the resulting socio-legal system we extend Debreu’s concepts of a social system and its social equilibria to a socio-legal system with its Debreu–Hurwicz equilibria. We build on a more general version of social equilibrium due to Shafer and Sonnenschein (J Math Econ 2(3):345–348, 1975) that also generalizes the dc-mechanism of Koray and Yildiz (J Econ Theory 176:479–502, 2018) which relates implementation via mechanisms with implementation via rights structures as introduced by Sertel (Designing rights: invisible hand theorems, covering and membership. Tech. rep. Mimeo, Bogazici University, 2001). In the second part we apply and illustrate these new concepts via an application in the narrow welfarist framework of two person cooperative bargaining. There we provide in a socio-legal system based on Nash’s demand game an implementation of the Nash bargaining solution in Debreu–Hurwicz equilibrium. AU - Haake, Claus-Jochen AU - Trockel, Walter ID - 29152 JF - Review of Economic Design SN - 1434-4742 TI - Socio-legal systems and implementation of the Nash solution in Debreu–Hurwicz equilibrium ER - TY - JOUR AB - I study a dynamic variant of the Dixit–Stiglitz (Am Econ Rev 67(3), 1977) model of monopolistic competition by introducing price stickiness à la Fershtman and Kamien (Econometrica 55(5), 1987). The analysis is restricted to bounded quantity and price paths that fulfill the necessary conditions for an open-loop Nash equilibrium. I show that there exists a symmetric steady state and that its stability depends on the degree of product differentiation. When moving from complements to perfect substitutes, the steady state is either a locally asymptotically unstable (spiral) source, a stable (spiral) sink or a saddle point. I further apply the Hopf bifurcation theorem and prove the existence of limit cycles, when passing from a stable to an unstable steady state. Lastly, I provide a numerical example and show that there exists a stable limit cycle. AU - Hoof, Simon ID - 45640 IS - 2 JF - Journal of Optimization Theory and Applications SN - 1573-2878 TI - Dynamic Monopolistic Competition VL - 189 ER - TY - JOUR AB - We analyze the actual behavior of agents in a matching mechanism, using data from a clearinghouse at the Faculty of Business Administration and Economics at a German university, where a variant of the Boston mechanism is used. We supplement this data with data generated in a survey among the students who participated in the clearinghouse. We find that under the current mechanism over 74% of students act strategically by misrepresenting at least one of their preferences. Nevertheless, not all students are able to improve their outcome by doing so. We show that this is mainly due to the incomplete information of students and naiveté. Sophisticated students actually reach significantly better outcomes than naive students. Thus, we find evidence that naive students are exploited by sophisticated students in an incomplete information setting. AU - Hoyer, Britta AU - Stroh-Maraun, Nadja ID - 16334 JF - Games and Economic Behavior TI - Matching Strategies of Heterogeneous Agents under Incomplete Information in a University Clearinghouse VL - 121 ER - TY - JOUR AU - Haake, Claus-Jochen AU - Trockel, Walter ID - 34115 IS - 1-2 JF - Homo Oeconomicus KW - Industrial and Manufacturing Engineering KW - Environmental Engineering SN - 0943-0180 TI - Introduction to the Special Issue “Bargaining” VL - 37 ER - TY - JOUR AU - Karl, Holger AU - Kundisch, Dennis AU - Meyer auf der Heide, Friedhelm AU - Wehrheim, Heike ID - 13770 IS - 6 JF - Business & Information Systems Engineering TI - A Case for a New IT Ecosystem: On-The-Fly Computing VL - 62 ER - TY - JOUR AB - Many countries have opened their health care markets to private for-profit providers, aiming to promote quality and choice for patients. The prices are regulated and providers compete in location and quality. We show that whereas opening a public hospital market typically raises quality, the private provider strategically locates towards the corner of the market to avoid costly quality competition. Social welfare depends on the size of the regulator's budget and on the altruism of the public provider. If the budget is large, high quality results and welfare is highest in a duopoly whenever entry is optimal. If the budget is small, quality levels in a duopoly mirror the quality level in a monopoly. It can be optimal for the regulator not to use the full budget. AU - Hehenkamp, Burkhard AU - Kaarbøe, Odvar M. ID - 17350 JF - Journal of Economic Behavior & Organization TI - Location Choice and Quality Competition in Mixed Hospital Markets VL - 177 ER - TY - JOUR AB - We investigate the degree of price competition among telecommunication firms. Underlying a Bertrand model of price competition, we empirically model pricing behaviour in an oligopoly. We analyse panel data of individual pricing information of mobile phone contracts offered between 2011 and 2017. We provide empirical evidence that price differences as well as reputational effects serve as a signal to buyers and significantly affect market demand. Additionally, we find that brands lead to an increase in demand and thus are able to generate spillover effects even after price increase. AU - Kaimann, Daniel AU - Hoyer, Britta ID - 1139 IS - 1 JF - Applied Economics Letters TI - Price competition and the Bertrand model: The paradox of the German mobile discount market VL - 26 ER - TY - JOUR AB - Social psychology studies the "common enemy effect", the phenomenon that members of a group work together when they face an opponent, although they otherwise have little in common. An interesting scenario is the formation of an information network where group members individually sponsor costly links. Suppose that ceteris paribus, an outsider appears who aims to disrupt the information flow within the network by deleting some of the links. The question is how the group responds to this common enemy. We address this question for the homogeneous connections model of strategic network formation, with two-way flow of information and without information decay. For sufficiently low linkage costs, the external threat can lead to a more connected network, a positive common enemy effect. For very high but not prohibitively high linkage costs, the equilibrium network can be minimally connected and efficient in the absence of the external threat whereas it is always empty and ineffi cient in the presence of the external threat, a negative common enemy effect. For intermediate linkage costs, both connected networks and the empty network are Nash for certain cost ranges. AU - Hoyer, Britta AU - Haller, Hans ID - 2256 JF - Journal of Economic Behavior & Organization TI - The Common Enemy Effect under Strategic Network Formation and Disruption VL - 162 ER - TY - JOUR AB - Models on network formation have often been extended to include the potential of network disruption in recent years. Whereas the theoretical research on network formation under the threat of disruption has thus gained prominence, hardly any experimental research exists so far. In this paper, we therefore experimentally study the emergence of networks including the aspect of a known external threat by relating theoretical predictions by Dzuibiński and Goyal (2013) to actual observed behaviour. We deal with the question if subjects in the role of a strategic Designer are able to form safe networks for least costs while facing a strategic Adversary who is going to attack their networks. Varying the costs for protecting nodes, we designed and tested two treatments with different predictions for the equilibrium network and investigated whether one of the least cost equilibrium networks was more likely to be reached. Furthermore, the influence of the subjects’ farsightedness on their decision-making process was elicited and analysed. We find that while subjects are able to build safe networks in both treatments, equilibrium networks are only built in one of the two treatments. In the other treatment, predominantly safe networks are built but they are not for least costs. Additionally, we find that farsightedness –as measured in our experiment– has no influence on whether subjects are able to build safe or least cost equilibrium networks. Two robustness settings with a reduced external threat or more liberties to modify the initial networks qualitatively confirm our results. Overall, in this experiment observed behaviour is only partially in line with the theoretical predictions by Dzuibiński and Goyal (2013). AU - Endres, Angelika Elfriede AU - Recker, Sonja AU - Mir Djawadi, Behnud AU - Hoyer, Britta ID - 80 JF - Journal of Economic Behavior and Organization TI - Network Formation and Disruption - An Experiment: Are equilibrium networks too complex? VL - 157 ER - TY - GEN AB - In this paper, we analyze a credence goods model adjusted to the health care market with regulated prices and heterogeneous experts. Experts are physicians and are assumed to differ in their cost of treating a small problem. We investigate the effects of this heterogeneity on the physicians’ level of fraud and on the patients’ search for second opinions. We find that introducing a fraction of more efficient low-cost physicians always increases social welfare, but in some cases only because of the raised physicians’ surplus. When the low-cost physicians’ cost advantage is small, imposing a share of low-cost physicians does not change the equilibrium fraud level. When the cost advantage is large, however, different changes in the fraud level occur depending on the share of generated low-cost physicians, the search rate and the initial level of fraud. AU - Heinzel, Joachim Maria Josef ID - 7630 KW - credence goods KW - treatment efficiency KW - heterogeneous experts KW - overcharging TI - Credence Goods Markets with Heterogeneous Experts VL - 118 ER -