Does Personalized Information Improve Health Plan Choices When Individuals are Distracted?

Posted: 7 Aug 2018

See all articles by Tobias Müller

Tobias Müller

University of Bern - Department of Economics; University of Lucerne

Stefan Boes

University of Lucerne

Andreas Hefti

University of Zurich - Department of Economics; Zurich University of Applied Sciences

Cornel Kaufmann

University of Lucerne

Date Written: May 2018

Abstract

Choice-based health insurance systems allow individuals to select a health plan that fits their needs. However, bounded rationality and limited attention may lead to sub-optimal insurance coverage and higher-than-expected out-of-pocket payments. In this paper, we study the impact of providing personalized information on health plan choices in a laboratory experiment. We seek to more closely mimic real-life choices by randomly providing an incentivized distraction to some individuals. We find that providing personalized information significantly improves health plan choices. The positive effect is even larger and longer-lasting if individuals are distracted from their original task. In addition to providing decision support, receiving personalized information restores the awareness of the choice setting to a level comparable to the case without distraction thus reducing inertia. Our results indicate that increasing transparency of the health insurance system and providing tailored information can help individuals to make better choices and reduce their out-of-pocket expenditures.

Keywords: health insurance choice, decision under uncertainty, limited attention, inertia, information, laboratory experiment

JEL Classification: I13, D83, C91

Suggested Citation

Müller, Tobias and Boes, Stefan and Hefti, Andreas M. and Kaufmann, Cornel, Does Personalized Information Improve Health Plan Choices When Individuals are Distracted? (May 2018). Journal of Economic Behavior and Organization, Vol. 149, 2018, Available at SSRN: https://ssrn.com/abstract=3216407

Tobias Müller (Contact Author)

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

University of Lucerne ( email )

Hofstrasse 9
P.O. Box 7464
Luzern 7, CH - 6000
Switzerland

Stefan Boes

University of Lucerne ( email )

Frohburgstrasse 3
P.O. Box 4466
Lucerne, Lucerne CH - 6002
Switzerland

Andreas M. Hefti

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

Zurich University of Applied Sciences ( email )

Institut fuer Angewandte Medienwissenschaft
Zur Kesselschmiede 35
Winterthur, CH 8401
Switzerland

Cornel Kaufmann

University of Lucerne ( email )

Hofstrasse 9
P.O. Box 7464
Luzern 7, CH - 6000
Switzerland

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