Genetic testing with primary prevention and moral hazard

David Bardey and Philippe De Donder

No 9798, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: We develop a model where a genetic test reveals whether an individual has a low or high probability of developing a disease. A costly prevention effort allows high-risk agents to decrease this probability. Agents are not obliged to take the test, but must disclose its results to insurers, and taking the test is associated to a discrimination risk.We study the individual decisions to take the test and to undertake the prevention effort as a function of the effort cost and of its efficiency. If effort is observable by insurers, agents undertake the test only if the effort cost is neither too large nor toolow. If the effort cost is not observable by insurers, moral hazard increases the valueof the test if the effort cost is low. We offer several policy recommendations, from theoptimal breadth of the tests to policies to do away with the discrimination risk.

Keywords: discrimination risk; informational value of test; personalized medicine. (search for similar items in EconPapers)
JEL-codes: D82 I18 (search for similar items in EconPapers)
Pages: 48
Date: 2012-07-13
New Economics Papers: this item is included in nep-cta
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://repositorio.uniandes.edu.co/bitstream/handle/1992/8317/dcede2012-10.pdf

Related works:
Journal Article: Genetic testing with primary prevention and moral hazard (2013)
Working Paper: Genetic testing with primary prevention and moral hazard (2012)
Working Paper: Genetic testing with primary prevention and moral hazard (2012)
Working Paper: Genetic testing with primary prevention and moral hazard (2012)
Working Paper: Genetic testing with primary prevention and moral hazard (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:col:000089:009798

Access Statistics for this paper

More papers in Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE Contact information at EDIRC.
Bibliographic data for series maintained by Universidad De Los Andes-Cede ().