Quality provision and reporting when health care services are multi-dimensional and quality signals imperfect

Katharina Huesmann and Wanda Mimra

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: We model competition for a multi-attribute service, like health care services, where consumers observe attribute quality imprecisely before deciding on a provider. High quality in one attribute is more important in terms of ex post utility. Attribute quality is stochastic, providers can shift resources in order to increase expected quality in some attributes. Consumers rationally focus on attributes depending on signal precision and beliefs about the providers' resource allocations. When signal precision is such that consumers focus weakly on the less important attribute, any Perfect Bayesian Nash Equilibrium is inefficient. Increasing signal precision can reduce welfare, as the positive effect of better provider selection is overcompensated by the negative effect that a shift in consumer focusing has on provider quality choice. We discuss the providers' incentives for information disclosure.

JEL-codes: D83 I11 L15 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-com, nep-hea and nep-ind
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112849

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