Genetic testing with primary prevention and moral hazard
AbstractWe develop a model where a genetic test reveals whether an individual has a low or high probability of developing a disease. Testing is not mandatory, but agents have to reveal their test results to the insurers, facing a discrimination risk. A costly prevention effort allows agents with a genetic predisposition to decrease their probability to develop the disease. We study the individual decisions to take the test and to undertake the prevention effort as a function of the effort cost and of its efficiency. If effort is observable by insurers, agents undertake the test only if the effort cost is neither too large nor too small. If the effort cost is not observable by insurers, moral hazard increases the value of the test if the effort cost is low. We offer several policy recommendations, from the optimal breadth of the tests to policies to do away with the discrimination risk.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Health Economics.
Volume (Year): 32 (2013)
Issue (Month): 5 ()
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Web page: http://www.elsevier.com/locate/inca/505560
Discrimination risk; Informational value of test; Personalized medicine;
Other versions of this item:
- Bardey, David & De Donder, Philippe, 2012. "Genetic testing with primary prevention and moral hazard," TSE Working Papers 12-320, Toulouse School of Economics (TSE).
- Bardey, David & De Donder, Philippe, 2012. "Genetic testing with primary prevention and moral hazard," CEPR Discussion Papers 8977, C.E.P.R. Discussion Papers.
- David Bardey & Philippe De Donder, 2011. "Genetic testing with primary prevention and moral hazard," DOCUMENTOS DE TRABAJO 009083, UNIVERSIDAD DEL ROSARIO.
- Bardey, David & De Donder, Philippe, 2012. "Genetic testing with primary prevention and moral hazard," IDEI Working Papers 729, Institut d'Économie Industrielle (IDEI), Toulouse.
- David Bardey & Philippe De Donder, 2012. "Genetic testing with primary prevention and moral hazard," DOCUMENTOS CEDE 009798, UNIVERSIDAD DE LOS ANDES-CEDE.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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