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Reputational concerns with altruistic providers

Pau Olivella () and Luigi Siciliani ()

Journal of Health Economics, 2017, vol. 55, issue C, 1-13

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.

Keywords: Reputation; Altruism; Doctors; Name and shame policies; Pay for performance (search for similar items in EconPapers)
JEL-codes: I11 I18 (search for similar items in EconPapers)
Date: 2017
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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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