Asymmetric Information from Physician Agency: Optimal Payment and Healthcare Quantity
AbstractWe model asymmetric information arising from physician agency, and its effect on the design of payment and healthcare quantity. The physician-patient coalition aims to maximize a combination of physician profit and patient benefit. The degree of substitution between profit and patient benefit in the physician-patient coalition is the physician’s private information, as is the patient’s intrinsic valuation of treatment quantity. The equilibrium mechanism depends only on the physician-patient coalition parameter. Moreover, the equilibrium mechanism exhibits extensive pooling, with prescribed quantity and payment being insensitive to the agency characteristics or patient’s actual benefit. The optimal mechanism is interpreted as managed care where strict approval protocols are placed on treatments.
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Bibliographic InfoPaper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2006-006.
Length: 37 pages
Date of creation: Feb 2006
Date of revision:
Physician Agency; Altruism; Optimal Payment; Healthcare Quantity; Managed Care;
Other versions of this item:
- Philippe Choné & Ching-to Albert Ma, 2004. "Asymmetric Information from Physician Agency : Optimal Payment and Healthcare Quantity," Working Papers 2004-37, Centre de Recherche en Economie et Statistique.
- Philippe Chone & Ching-to Albert Ma, 2005. "Asymmetric Information from Physician Agency:Optimal Payment and Healthcare Quantity," Boston University - Department of Economics - Working Papers Series WP2005-006, Boston University - Department of Economics.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- I1 - Health, Education, and Welfare - - Health
- I10 - Health, Education, and Welfare - - Health - - - General
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-05-06 (All new papers)
- NEP-HEA-2006-05-06 (Health Economics)
- NEP-MIC-2006-05-06 (Microeconomics)
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