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Persuasion in Physician Agency

Author

Listed:
  • Elias Carroni
  • Giuseppe Pignataro
  • Luigi Siciliani

Abstract

We revisit the physician-patient agency problem in a model where patients differ in their preferences for treatment and the physician decides whether to recommend a treatment based on the results of a diagnostic test. We show that, in equilibrium, some patients who could benefit from treatment remain untreated, while others receive unnecessary treatment. We explore several policy interventions. A policy that does not authorize tests with high false positives increases health and welfare. Instead, mandatory testing increases health but the effect on welfare is ambiguous. Last, financial incentives increase health by reducing the number of untreated patients but reduce welfare.

Suggested Citation

  • Elias Carroni & Giuseppe Pignataro & Luigi Siciliani, 2023. "Persuasion in Physician Agency," Discussion Papers 23/01, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:23/01
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    References listed on IDEAS

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    More about this item

    Keywords

    Medical tests; Medical Recommendation; Bayesian Persuasion; Health Policy.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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