RT Monograph
SR 00
A1 De Donder, Philippe
A1 Bardey, David
A1 Leroux, Marie-Louise
T1 Incentivizing Physicians' Diagnostic Effort and Test with Moral Hazard and Adverse Selection
YR 2024
FD 2024-11
VO 24-1595
SP 65
K1 Diagnostic risk
K1 Personalized medicine
K1 Non-responsiveness
K1 Capitation payment
K1 Pay-for -performance
K1 Hidden action
K1 Hidden information
AB We study a situation where physicians differing in their degree of altruism exert a diagnostic effort before deciding whether to test patients to determine the most appropriate treatment. The diagnostic effort generates an imperfect private signal of the patient’s type, while the test is perfect. At the laissez-faire, physicians exert insufficient diagnostic effort and rely excessively on testing. We show that the first-best allocation (where the degree of altruism is observable) can be decentralized by a payment scheme composed of i) a payforperformance (P4P) part based on the number of correctly treated patients to ensure the provision of the optimal diagnostic effort, and of ii) a capitation part to ensure both the optimal testing decision and the participation of physicians. When physicians differ in their (non-observable) degree of altruism, the optimal contract is pooling rather than separating, an instance of non-responsiveness. Its uniform P4P component induces more altruistic physicians to exert a larger diagnostic effort while, to incentivize the second-best optimal testing decision, its capitation component must be contingent on the test cost.
T2 TSE Working Paper
PB TSE Working Paper
PP Toulouse
AV Published
LK https://publications.ut-capitole.fr/id/eprint/49880/
UL http://tse-fr.eu/pub/129935