Reputational Concerns with Altruistic Providers

Pau Olivella, Luigi Siciliani

Research output: Contribution to journalArticlepeer-review

Abstract

We study a model of reputational concerns when doctors differ in their degree of altruism and they can signal their altruism by their (observable) quality. When reputational concerns are high, following the introduction or enhancement of public reporting, the less altruistic (bad) doctor mimics the more altruistic (good) doctor. Otherwise, either a separating or a semi-separating equilibrium arises: the bad doctor mimics the good doctor with probability less than one. Pay-for-performance incentive schemes are unlikely to induce crowding out, unless some dimensions of quality are unobservable. Under the pooling equilibrium a purchaser can implement the first-best quality by appropriately choosing a simple payment scheme with a fixed price per unit of quality provided. This is not the case under the separating equilibrium. Therefore, policies that enhance public reporting complement pay-for-performance schemes.

Original languageEnglish
Pages (from-to)1-13
Number of pages13
JournalJournal of Health Economics
Volume55
Early online date1 Jun 2017
DOIs
Publication statusPublished - Sept 2017

Bibliographical note

© 2017, Elsevier B.V. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.

Keywords

  • Altruism
  • Doctors
  • Name and shame policies
  • Pay for performance
  • Reputation

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