How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing? Theory and Experiment

David Bardey, Philippe De Donder and César Mantilla

No 15465, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: We compare two genetic testing regulations, Disclosure Duty (DD) and Consent Law (CL), in an environment where individuals choose to take a genetic test or not. DD forces agents to reveal the test results to their insurers, resulting in a discrimination risk. CL allows agents to withhold that information, generating adverse selection. We complement our model with an experiment. We obtain that a larger fraction of agents test under CL than under DD, and that the proportion of individuals preferring CL to DD is non-monotone in the test cost when adverse selection is set endogenously at its steady state level.

Keywords: Consent Law; Disclosure Duty; Personalized Medicine; Test take up rate; pooling health insurance contracts (search for similar items in EconPapers)
JEL-codes: C91 D82 I18 (search for similar items in EconPapers)
Pages: 49
Date: 2017-03-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://repositorio.uniandes.edu.co/bitstream/handle/1992/8681/dcede2017-23.pdf

Related works:
Journal Article: How is the trade-off between adverse selection and discrimination risk affected by genetic testing? Theory and experiment (2019)
Working Paper: How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing?: Theory and Experiment (2019)
Working Paper: How is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing? Theory and Experiment (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:015465

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