Persuasion in Physician Agency

24 Pages Posted: 7 May 2021 Last revised: 19 Oct 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

The incentive of physicians in recommending unnecessary medical treatments to patients constitutes an important agency problem in health care. This paper discusses this issue by providing a theoretical model with one physician and a mass of patients who are uncertain about an underlying state of disease. The physician provides a recommendation based on an informative experiment which always reveals the state of disease, but not always the healthy state. This may induce some people undertaking unnecessary treatment as well as some others refraining from doing so when it is needed. A policy intervention imposing a minimum information standard is very effective to reduce overtreatment but does not influence the number of patients who receive credible information. Moreover, we show the unintended consequences of releasing relevant news with or without the policy intervention.

Keywords: Overtreatment; Bayesian Persuasion; Medical Recommendation; 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://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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