Persuasion in Physician Agency

20 Pages Posted: 7 May 2021 Last revised: 12 Jul 2021

See all articles by Elias Carroni

Elias Carroni

University of Bologna - Department of Economics

Giuseppe Pignataro

University of Bologna - Department of Economics

Date Written: April 23, 2021

Abstract

Overwhelming evidence suggests that there exists a physician's tendency in recommending unnecessary medical treatments to the patients. This paper discusses this issue by providing a theoretical model with one physician and many patients who are uncertain about an underlying state of disease. The physician decides a preliminary test for the patients who need it. We show that the optimal test always reveals the state of disease, but not always the healthy state. The physician's advice may induce people undertaking unnecessary treatment as well as refraining from doing it when is needed. A policy intervention imposing a minimum information standard is very effective in reducing overtreatment but does not influence the number of tested people. Moreover, we show unintended consequences of releasing relevant news with or without the policy intervention.

Keywords: Overtreatment; Bayesian Persuasion; Medical Tests; Policy Intervention

JEL Classification: D82; D83; I10; I18.

Suggested Citation

Carroni, Elias and Pignataro, Giuseppe, 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://https://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)

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