Persuasion in Physician Agency

Elias Carroni, Giuseppe Pignataro and Luigi Siciliani

Discussion Papers from Department of Economics, University of York

Abstract: We revisit the physician-patient agency problem in a model where patients differ in their preferences for treatment and the physician decides whether to recommend a treatment based on the results of a diagnostic test. We show that, in equilibrium, some patients who could benefit from treatment remain untreated, while others receive unnecessary treatment. We explore several policy interventions. A policy that does not authorize tests with high false positives increases health and welfare. Instead, mandatory testing increases health but the effect on welfare is ambiguous. Last, financial incentives increase health by reducing the number of untreated patients but reduce welfare.

Keywords: Medical tests; Medical Recommendation; Bayesian Persuasion; Health Policy. (search for similar items in EconPapers)
JEL-codes: D82 D83 I10 I18 (search for similar items in EconPapers)
Date: 2023-02
New Economics Papers: this item is included in nep-hea
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