James M. Malcomson: Difference between revisions

Malcomson was lecturer, then senior lecturer, at the [[University of York]] (1972-85), Professor of Economics at the [[University of Southampton]] (1985-1999) and then statutory Professor of Economics at the University of Oxford and Fellow of All Souls College (1999-2013). He was elected Fellow of the [[British Academy]] in 2000 and Fellow of the [[Econometric Society]] in 2005. He chaired the [[The_Office_of_Health_Economics|Office of Health Economics]] Commission on Competition in the NHS, 2011-12<ref>''Competition in the NHS'', Report of the Office of Health Economics Commission, January 2012</ref> and served as a member of the [[Review_Body_on_Doctors'_and_Dentists'_Remuneration|Review Body on Doctors’ and Dentists’ Remuneration]], 2015-2021.<ref>https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1005003/DDRB_2021_Web_Accessible_v2.pdf p. iii. Retrieved 17 March 2023</ref>

Malcomson’s early research analysed vintage effects in investment, especially the implications for obsolescence, replacement and utilisation of capital equipment and the effects of tax policy on these. He derived rigorous theoretical models of optimal investment and replacement that do not rely on stationarity [1],<ref>Morton I. Kamien and Nancy L. Schwartz, ''Dynamic Optimization'' (2nd edition, Dover, 2012, p. 361)</ref> showed how optimal policies relate to simple rules, and derived analytic results for the effects of changes in tax policy on investment and replacement [3].<ref>Mark Blaug and Howard Vane (eds.), ''Who's Who in Economics'' (4th edition), (Edward Elgar, 2003)</ref> He also devised ways to estimate such models empirically without imposing stationarity, an essential step in predicting the short-run effects of tax policy changes [2],<ref>E. Bjørn, ''Taxation, Technology, and the User Cost of Capital'' (Elsevier, 1989, p. 122)</ref><ref>Terry Barker, Paul Ekins and Nick Johnstone (eds.), ''Global Warming and Energy Demand'' (Routledge, 1994, p. 124)</ref>. He additionally explored dynamic inconsistency in government policies [6],<ref>Keith Blackburn and Michael Christensen, "Monetary policy and policy credibility: theories and evidence", ''Journal of Economic Literature'', 27, 1989, p. 12</ref> the [[Laffer Curve]] [7],<ref>John Kay, "Tax policy: a survey", ''Economic Journal'', 100, 1990, p. 35</ref> and the impact of trade unions [9].<ref>Pierre Cahuc. Stéphane Carcillo and André Zylberberg, ''Labor Economics'' (MIT Press, 2014, pp. 755, 780)</ref>

Malcomson’s empirical research on production convinced him of the need for economists to understand better the labour side of the production process and much of his more recent research has been directed towards that.<ref>Mark Blaug and Howard Vane (eds.), ''Who's Who in Economics'' (4th edition), (Edward Elgar, 2003)</ref> One of his main concerns has been with different ways of motivating employees when important aspects of performance are not easily specified in the employment contract and their implications: high pay coupled with the threat of dismissal for unsatisfactory performance ([[Efficiency wage|efficiency wages]]) [4]<ref>Oliver Hart and Bengt Holmström, "The theory of contracts" in Truman F. Bewley (ed.), ''Advances in Economic Theory'' (Cambridge University Press, 1987, p. 123)</ref><ref>Lewis A. Kornhauser and W. Bentley MacLeod, "Contracts between legal persons" in Robert Gibbons and John Roberts (eds.), ''Handbook of Organizational Economics'' (Princeton University Press, 2013, p. 929)</ref>, competition for promotion [5],<ref>Oliver Hart and Bengt Holmström, "The theory of contracts" in Truman F. Bewley (ed.), ''Advances in Economic Theory'' (Cambridge University Press, 1987, p. 122)</ref><ref>Robert Gibbons and Michael Waldman, "Careers in organizations: theories and evidence" in Orley C. Ashenfelter and David Card (eds.), ''Handbook of Labor Economics'', Volume 3B (Elsevier, 1999, pp. 2401-2)</ref><ref>Robert Gibbons and John Roberts, "Economic theories of incentives in organizations" in Robert Gibbons and John Roberts (eds.), ''Handbook of Organizational Economics'' (Princeton University Press, 2013, p. 67)</ref><ref>Michael Waldman, "Theory and evidence in internal labor markets" in Robert Gibbons and John Roberts (eds.), ''Handbook of Organizational Economics'' (Princeton University Press, 2013, pp. 528-9)</ref> [[Tournament_theory|tournaments]] [8]<ref>Oliver Hart and Bengt Holmström, "The theory of contracts" in Truman F. Bewley (ed.), ''Advances in Economic Theory'' (Cambridge University Press, 1987, p. 89)</ref> and repeated interaction over time [10],<ref>Oliver Hart and Bengt Holmström, "The theory of contracts" in Truman F. Bewley (ed.), ''Advances in Economic Theory'' (Cambridge University Press, 1987, p. 98)</ref> which "showed that the optimal long-term contract can be replicated by a sequence of optimal static contracts when the agent's saving decision can be controlled by the principal."<ref>Jean-Jacques Laffont and David Martimort, ''The Theory of Incentives'' (Princeton University Press, 2002, pp. 332-3)</ref> With [[W. Bentley MacLeod]], he characterized the full set of outcomes that can be sustained in such repeated [[Principal–agent problem|principal-agent]] contexts [12], described as "the "classic" relational contract model"<ref>W. Bentley MacLeod, ''Advanced Microeconomics'' (MIT Press, 2022, p. 267)</ref> and "(t)he most complete analysis of [[Relational_contract|relational contracts]] under symmetric information".<ref>Patrick Bolton and Mathias Dewatripont, ''Contract Theory'' (MIT Press, 2005), p. 462)</ref> Together they also showed that tournaments and competition for promotion can provide effective methods of motivation provided agent-employees are sufficiently heterogeneous in their abilities, a system that “mimics a remarkable number of the features of actual job ladders in internal labor markets” <ref>Paul Milgrom and John Roberts, ''Economics, Organization and Management'' (Prentice-Hall, 1992, p. 374)</ref> [11]. Performance-related bonuses are effective even when agent-employees are homogeneous but may result in less efficient outcomes than efficiency wages when prospective employees are plentiful relative to jobs [18].<ref>Robert Gibbons and Michael Waldman, "Careers in organizations: theories and evidence" in Orley C. Ashenfelter and David Card (eds.), ''Handbook of Labor Economics'', Volume 3B (Elsevier, 1999, p. 2390)</ref> But when employees differ in abilities, competition for promotion may be open to influence activities and so distort allocation of employees to more senior jobs [21]<ref>Patrick Bolton and Mathias Dewatripont, ''Contract Theory'' (MIT Press, 2005, p. 316)</ref><ref>Edward P. Lazear and Paul Oyer, "Personnel Economics" in Robert Gibbons and John Roberts (eds.), ''Handbook of Organizational Economics'' (Princeton University Press, 2013, pp. 483, 495)</ref><ref>Michael Waldman, "Theory and evidence in internal labor markets" in Robert Gibbons and John Roberts (eds.), ''Handbook of Organizational Economics'' (Princeton University Press, 2013, p. 532)</ref> and efficient outcomes in the future prevent full separation of abilities when differences are sufficiently fine [26] in which "Malcomson provides a general analysis of relational contracts with persistent private information. He shows that full revelation of information is inconsistent with continuation payoffs being on the Pareto frontier, and therefore it generalizes the observation that asymmetric information leads to conflict in relational contracts."<ref>W. Bentley MacLeod, ''Advanced Microeconomics'' (MIT Press, 2022, p. 331)</ref> This approach has been taken up in the subsequent literature.<ref>David Martimort, Aggey Semenov and Lars Stole, "A theory of contracts with limited enforcement", ''Review of Economic Studies'', 84, 2017, p. 820</ref> These results have implications for dual economies [18] and cyclical behavior [14], in which the "interplay between competition and relational contracts also has implications for output over the business cycle".<ref>W. Bentley MacLeod, ''Advanced Microeconomics'' (MIT Press, 2022, p. 275)</ref> The implications for labour markets are surveyed in [15] and, more completely, in [19]<ref>Pierre Cahuc. Stéphane Carcillo and André Zylberberg, ''Labor Economics'' (MIT Press, 2014, p. 325)</ref> and those for economic organizations in [25].

Other research with W. Bentley MacLeod has shown that the types of contracts used in many practical situations have properties that theory suggests are appropriate for protecting investments in general and specific assets [13].<ref>Ilya Segal and Michael D. Whinston, "Property rights" in Robert Gibbons and John Roberts (eds.), ''Handbook of Organizational Economics'' (Princeton University Press, 2013, pp. 129, 138)</ref><ref>Lewis A. Kornhauser and W. Bentley MacLeod, "Contracts between legal persons" in Robert Gibbons and John Roberts (eds.), ''Handbook of Organizational Economics'' (Princeton University Press, 2013, p. 937)</ref> Research with other co-authors has shown how time-serving apprenticeships can mitigate incentive issues in training [22]<ref>Jane Humphries, ''Childhood and Child Labour in the British Industrial Revolution'' (Cambridge University Press, 2010, pp. 285-288)</ref> and the role for not-for-profit providers in provision of public sector services [27].<ref>Mathias Dewatripont and Jean Tirole, ''The Morality of Markets'' (ECARES, 2022, p. 36)</ref> Malcomson also analysed forms of contract appropriate for the provision of health services [23]<ref>Kurt R. Brekke, Robert Nuscheler, Odd Rune Straume, "Gatekeeping in health care", ''Journal of Health Economics'', 26(1), 2007, p. 152</ref><ref>Ching-to Albert Ma and Henry Y. Mak, "Incentives in healthcare payment systems" in Andrew Jones (ed.), ''The Oxford Encyclopedia of Health Economics'' (Oxford University Press, 2020)</ref>, [24]<ref>Ching-to Albert Ma and Henry Y. Mak, "Incentives in healthcare payment systems" in Andrew Jones (ed.), ''The Oxford Encyclopedia of Health Economics'' (Oxford University Press, 2020)</ref> and, most notably, the quality of care [16] and [17], developments surveyed in [20].<ref>Joseph P. Newhouse, ''Pricing the Priceless'' (MIT Press, 2002, pp. 93-98)</ref>

Malcomson is married to the social gerontologist Dr Sally Richards.<ref>''Who's Who 2023'' (Bloomsbury, 2022)</ref> They live in Oxford.