Timmy Tiptoes and the Tale of Costly Punishment

By Dr David Hugh-Jones

timmy-tiptoes-2This post is about a paper of mine with Carlo Perroni of Warwick University, The Logic of Costly Punishment Reversed. It has just been accepted in the Journal of Economic Behavior and Organization (ungated version at my website).

The germ for this paper came in 2006 at Northwestern University, in a chat with my game theory lecturer, Christoph Kuzmics. He mentioned to me that he was working on evolutionary game theory explanations for costly punishment.

The idea of costly punishment is that people are prepared to pay costs so as to punish bad behaviour or take revenge. For example, if a guy starts a bar fight because you spilled his beer, or someone lectures you for leaving litter, that might be costly punishment. Why is that important? Well, all societies need to maintain order – to prevent crime and ensure that people contribute to community goods. Modern societies have the machinery of the state –  the policeman and the tax office – to do this.  But throughout history, most people have lived in small societies without states; and there are many kinds of bad behaviour, like littering, that it would be too expensive or intrusive to control using the state’s coercive power. Instead,  people in the group must punish bad behaviour, either verbally, financially or physically.

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Meet the Lecturers: Matt Aldrich


Matt Aldrich: Intrepid Labour Economist

Can you tell us a little bit about your background and main interests in economics?

Throughout my A-levels I planned to study engineering at university; a late change of heart (because I enjoyed economics more than physics!) led me to studying Economics here at UEA. I was inspired by a research project in a 3rd year module – Labour Economics –  which I chose to do on job prospects for graduates,  to stay on for a Masters and a PhD, both here at UEA, in order to research the graduate labour market in more detail. I was lucky enough to get a lectureship here when my PhD finished. My main interests in economics are the labour market, social policy and welfare. I’m currently doing research into fatherhood which covers all three of these areas!
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Meet the Lecturers: Mike Brock


Mike Brock – Economist, Environmentalist, Baker!

Can you tell us a little bit about your background and main interests in economics?

I am originally from the West of England and came to Norwich in 2007. Having completed my undergraduate and postgraduate studies at UEA, I began as a lecturer in August 2014.

My main interests are in behavioural and environmental economics.  In particular, I focus upon looking at how and why people attach value to the environment and how we can use behavioural economics to try and help people to act in more environmentally sustainable ways.

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Meet the Lecturers: Jack Fosten

After a brief hiatus, we have decided to start the year off with a new series of Meet the Lecturers, so without further ado; Dr Jack Fosten!

Can you tell us a little bit about your background and main interests in economics?

I grew up in the Kentish suburbs of London and decided to study economics at the University of Bath after a last-minute decision not to study modern foreign languages, something for which I am now thankful! Throughout my undergraduate career I became interested in the quantitative side of economics and was never happy with settling for explanations of economic concepts which just used words or diagrams. I went on to the University of Warwick to study for an MSc and PhD in economics, the latter of which I transferred to the University of Surrey. In 2015 I took up my first position as an academic here at UEA.

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Pfizer and Flynn: How are ‘excessive’ prices for generic drugs possible and should competition authorities do more about exploitative pricing?

(by Farasat Bokhari & Bruce Lyons)

Last week the UK Competition and Markets Authority (CMA) imposed a fine of approximately £90 million on Pfizer and a generic manufacturer Flynn Pharma, on the grounds that each abused a dominant position by charging excessive and unfair prices for phenytoin sodium capsules, an anti-epilepsy drug (brand name Epanutin). The price of a pack of 84 capsules of 100MG increased from £2.83 to £67.50 in October 2012.   This came about as part of a deal where Pfizer sold the distribution rights in the UK to Flynn Pharma, who in turn ‘de-branded’ the drug, and sold the generic at an inflated price.   The drug in question is not protected by any patents, so other generics are available and further generic entry is possible, yet the branded original drug was replaced by a higher priced generic.  The CMA’s case is a rare example of an abuse of dominance finding (under Art. 102 and/or Ch.2 of CA98) in relation to exploitative pricing. While we await the full published decision, it is worth looking at industry price and quantity data to contextualise the CMA’s case. We also try to understand how this price hike was possible and ask whether the CMA should pursue more exploitative pricing cases.


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Is Populism Dumb?

By Dr David Hugh-Jones

After the Brexit vote, a standard story is doing the rounds: the poor and uneducated are threatened by globalization. They respond atavistically, asserting their superiority over ethnic outsiders. As a result, they are fooled into voting against their own interests, for racist parties who do not really care about them.

This explanation comes in various flavours. To make it more left-wing, substitute “neoliberal world order” for “globalization”. But the basic recipe is widely reused. Obama talked about people “clinging to guns and religion”. This year, we are told it explains why people are voting for Trump.

There are some specific problems with applying this idea to Brexit. The context for the British vote was not just “globalization”: it was free movement of labour in the EU, combined with policy failures elsewhere that have led large numbers of people to seek employment in the UK.

Here’s a more basic question. Is nationalism truly irrational?


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Clinton’s proposed ban on pay-for-delay deals would do little to lower drug prices

By Dr Farasat Bokhari

This article originally appeared in STAT on 28th September 2016.

Banning “pay-for-delay” deals that postpone the production of less-expensive generic drugs is a key action point in Hillary Clinton’s comprehensive plan to lower prescription drug costs. Eliminating these deals, she says, could save Americans billions of dollars on medications. But an even more productive strategy would be to stop drug makers from producing so-called authorized generics. (I tried to examine Donald Trump’s thoughts on this issue. While his website says he will remove “barriers to entry into free markets for drug providers,” no details are provided and no mention is made of pay-for-delay deals.)

A patent on a new therapeutic molecule is granted for 20 years, though its validity can be challenged at any time. Much of that 20-year window is often spent formulating the drug and testing it in animal studies and clinical trials. Acknowledging this delay, the Hatch-Waxman Act provides an incentive for drug development by granting the patent holder five years of market exclusivity during which no competitor can file to produce a generic variant. Not surprisingly, the price of the drug is high during this period.


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