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Health Insurance, Treatment Plan, and Delegation to Altruistic Physician

  • Ching-to Albert MA


    (Department of Economics, Boston University.)

  • Ting Liu


    (Department of Economics, Michigan State Univeristy)

We study delegating a consumer's treatment plan decisions to an altruistic physician. The physician's degree of altruism is his private information. The consumer's illness severity will be learned by the physician, and also become his private information. Treatments are discrete choices, and can be combined to form treatment plans. We distinguish between two commitment regimes. In the first, the physician commits to treatment decisions at the time a payment contract is accepted. In the second, the physician does not commit to treatment decisions at that time, and can wait until he learns the patient?s illness to do so. In the commitment game, the first best is implemented by a single payment contract to all types of the altruistic physician. In the noncommitment game, the first best is not implementable. All but the most altruistic physician earn positive pro?ts, and treatment decisions are distorted from the first best.

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Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2011-022.

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Length: 35 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:bos:wpaper:wp2011-022
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