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Reputational Concerns with Altruistic Providers

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JournalJournal of Health Economics
DateAccepted/In press - 24 May 2017
DateE-pub ahead of print - 1 Jun 2017
DatePublished (current) - Sep 2017
Volume55
Number of pages13
Pages (from-to)1-13
Early online date1/06/17
Original languageEnglish

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.

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© 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.

    Research areas

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

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