Reputational concerns with altruistic providers

Pau Olivella, Luigi Siciliani

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

© 2017 Elsevier B.V. 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.
Original languageEnglish
Pages (from-to)1-13
JournalJournal of Health Economics
Volume55
DOIs
Publication statusPublished - 1 Sep 2017

Keywords

  • Altruism
  • Doctors
  • Name and shame policies
  • Pay for performance
  • Reputation

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