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Asymmetric Information and the Demand for Health Care - the Case of Double Moral Hazard

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  • Udo Schneider

    (University of Bayreuth)

Abstract

The production of health does not only depend on the medical services supplied by the physi-cian but is also influenced by the patient’s compliance. A model of medical treatment is pre-sented in which both the actions of physician and patient are modeled as a productive input. The analysis distinguishes between three cases of strategic interaction. The consequences of asymmetric information between physician and patient are lower activity levels, only in the case of strategic substitutes the result might change. Furthermore, the effects of the implementation of a demand-side coinsurance are discussed.

Suggested Citation

  • Udo Schneider, 2004. "Asymmetric Information and the Demand for Health Care - the Case of Double Moral Hazard," HEW 0409001, EconWPA.
  • Handle: RePEc:wpa:wuwphe:0409001
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    References listed on IDEAS

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    1. Jeremy I. Bulow & John Geanakoplos & Paul D. Klemperer, 1983. "Multimarket Oligopoly," Cowles Foundation Discussion Papers 674, Cowles Foundation for Research in Economics, Yale University.
    2. Gaynor, Martin, 1994. "Issues in the Industrial Organization of the Market for Physician Services," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 211-255, Spring.
    3. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, vol. 9(4), pages 375-396, December.
    4. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643 Elsevier.
    5. Ma, Ching-to Albert & McGuire, Thomas G, 1997. "Optimal Health Insurance and Provider Payment," American Economic Review, American Economic Association, vol. 87(4), pages 685-704, September.
    6. Macho-Stadler, Ines & Perez-Castrillo, J. David, 2001. "An Introduction to the Economics of Information: Incentives and Contracts," OUP Catalogue, Oxford University Press, edition 2, number 9780199243273.
    7. Dionne, Georges & Contandriopoulos, Andre-Pierre, 1985. "Doctors and their workshops : A review article," Journal of Health Economics, Elsevier, vol. 4(1), pages 21-33, March.
    8. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
    9. Randall P. Ellis & Thomas G. McGuire, 1993. "Supply-Side and Demand-Side Cost Sharing in Health Care," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 135-151, Fall.
    10. Yavas, Abdullah, 1995. "Seller-Broker Relationship as a Double Moral Hazard Problem," Journal of Housing Economics, Elsevier, vol. 4(3), pages 244-263, September.
    11. Börsch-Supan, Axel, 1998. "Anreizprobleme in der Renten- und Krankenversicherung," Sonderforschungsbereich 504 Publications 98-44, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    12. Kim, Son Ku & Wang, Susheng, 1998. "Linear Contracts and the Double Moral-Hazard," Journal of Economic Theory, Elsevier, vol. 82(2), pages 342-378, October.
    13. Selden, Thomas M., 1990. "A model of capitation," Journal of Health Economics, Elsevier, vol. 9(4), pages 397-409, December.
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    Citations

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    Cited by:

    1. Udo Schneider & Volker Ulrich, 2007. "Health Relevant Behavior and its Impact on the Physician-Patient Relationship," Working Papers 023, Bavarian Graduate Program in Economics (BGPE).
    2. Udo Schneider & Volker Ulrich, 2008. "The physician-patient relationship revisited: the patient’s view," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 279-300, December.
    3. Udo Schneider, 2005. "Asymmetric Information and Outcome-based Compensation in Health Care – Theoretical Implications," HEW 0501006, EconWPA.
    4. Schneider, Udo & Zerth, Jürgen, 2008. "Improving prevention compliance through appropriate incentives," MPRA Paper 8280, University Library of Munich, Germany.

    More about this item

    Keywords

    principal-agent theory; double moral hazard; strategic interaction; compliance;

    JEL classification:

    • I - Health, Education, and Welfare
    • D - Microeconomics

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