Persuasion in Physician Agency

31 Pages Posted: 7 May 2021 Last revised: 21 Feb 2023

See all articles by Elias Carroni

Elias Carroni

University of Bologna - Department of Economics

Giuseppe Pignataro

University of Bologna - Department of Economics

Luigi Siciliani

University of York - Department of Economics and Related Studies

Date Written: April 23, 2021

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.

JEL Classification: D82, D83, I10, I18.

Suggested Citation

Carroni, Elias and Pignataro, Giuseppe and Siciliani, Luigi, Persuasion in Physician Agency (April 23, 2021). Available at SSRN: https://ssrn.com/abstract=3832620 or http://dx.doi.org/10.2139/ssrn.3832620

Elias Carroni

University of Bologna - Department of Economics ( email )

Bologna
Italy

HOME PAGE: http://sites.google.com/site/eliascarroninuoro/

Giuseppe Pignataro (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli, 2
https://www.giuseppepignataro.info
Bologna, Bologna 40122
Italy
3331127342 (Phone)
40126 (Fax)

Luigi Siciliani

University of York - Department of Economics and Related Studies ( email )

Heslington
York, YO1 5DD
United Kingdom

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