Asymmetric Information from Physician Agency : Optimal Payment and Healthcare Quantity
AbstractWe model asymmetric information arising from physician agency, and its effect on the design ofpayment and healthcare quantity. The physician-patient coalition aims to maximize a combinationof physician profit and patient benefit. The degree of substitution between profit and patient benefitin the physician-patient coalition is the physician’s private information, as is the patient’s intrinsicvaluation of treatment quantity. The equilibrium mechanism depends only on the physician-patientcoalition parameter. Moreover, the equilibrium mechanism exhibits extensive pooling, with prescribedquantity and payment being insensitive to the agency characteristics or patient’s actualbenefit. The optimal mechanism is interpreted as managed care where strict approval protocols areplaced on treatments.
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Bibliographic InfoPaper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2004-37.
Date of creation: 2004
Date of revision:
Other versions of this item:
- 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.
- Philippe Chone & Ching-to Albert Ma, 2006. "Asymmetric Information from Physician Agency: Optimal Payment and Healthcare Quantity," Boston University - Department of Economics - Working Papers Series WP2006-006, 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
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