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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 17-777, TSE Working Papers from Toulouse School of Economics (TSE)

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; Personalised 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)
Date: 2017-03, Revised 2019-07
New Economics Papers: this item is included in nep-cta, nep-exp and nep-hea
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