Asymmetric Information and the Demand for Health Care - the Case of Double Moral Hazard

University of Bayreuth Economics Discussion Paper No. 02-03

24 Pages Posted: 27 Sep 2004

Date Written: April 2003

Abstract

The production of health does not only depend on the medical services supplied by the physician but is also influenced by the patient's compliance. A model of medical treatment is presented in which both the actions of physician and patient are modeled as a productive input. The analysis distinguishes between three cases of strategic interaction. The consequences of asymmetric information between physician and patient are lower activity levels, only in the case of strategic substitutes the result might change. Furthermore, the effects of the implementation of a demand-side coinsurance are discussed.

Keywords: Principal-agent theory, double moral hazard, strategic interaction, compliance

JEL Classification: I11, D82

Suggested Citation

Schneider, Udo, Asymmetric Information and the Demand for Health Care - the Case of Double Moral Hazard (April 2003). University of Bayreuth Economics Discussion Paper No. 02-03, Available at SSRN: https://ssrn.com/abstract=574983 or http://dx.doi.org/10.2139/ssrn.574983

Udo Schneider (Contact Author)

Techniker Krankenkasse ( email )

Bramfelder Str. 140
D-22305 Hamburg
Germany

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