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How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing?: Theory and Experiment

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  • Bardey, David
  • De Donder, Philippe
  • Mantilla, Cesar

Abstract

We compare two genetic testing regulations, Disclosure Duty (DD) and Consent Law (CL), in an environment where individuals choose to take a genetic test or not. DD forces agents to reveal the test results to their insurers, resulting in a discrimination risk. CL allows agents to withhold that information, generating adverse selection. We complement our model with an experiment. We obtain that a larger fraction of agents test under CL than under DD, and that the proportion of individuals preferring CL to DD is non-monotone in the test cost when adverse selection is set endogenously at its steady state level.

Suggested Citation

  • Bardey, David & De Donder, Philippe & Mantilla, Cesar, 2017. "How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing?: Theory and Experiment," TSE Working Papers 17-777, Toulouse School of Economics (TSE), revised Jul 2019.
  • Handle: RePEc:tse:wpaper:31557
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 28th October 2019
      by Chris Sampson in The Academic Health Economists' Blog on 2019-10-28 12:00:05

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    1. David Bardey & Philippe De Donder, 2015. "Welfare Impacts of Genetic Testing in Health Insurance Markets: Will Cross-Subsidies Survive?," Documentos CEDE 017220, Universidad de los Andes - CEDE.

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    More about this item

    Keywords

    Consent Law; Disclosure Duty; Personalised Medicine; Test take up rate; pooling health insurance contracts;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • 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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