Frontiers of Economics Chapter 17

Rational versus Irrational Decision making in Health Care What do economists mean by “rational?” Some health behaviors seem inconsistent with rationality. Examples Various biases (Tversky and Kahneman) Self control

Information, Asymmetric Information and Its Effects: How People Obtain Information How do people obtain information and what are the search costs in a health care context? Example of health report cards Bayesian updating? How do people do it? Information and moral hazard and adverse selection

Principal-Agent Issues: Physicians Lack of carefully controlled studies of effects of physician compensation method on physicians’ decisions about care Lack of empirical evidence on various pay-for-performance regimes

Competition among Hospitals How do hospitals compete? Does greater competition lead to higher quality of hospital care?

Competition versus Public Regulation versus Public Ownership in Health Care How does entry regulation work in countries with entry regulation, in particularly those with private provision of health care services? What are the benefits and costs of privatizing public facilities?

Clinical Decision-making Further research needed on benefit measures How do physicians make clinical decisions and how does that relate to variables of interest to economists, such as physician compensation method, prices insurers pay for specific procedures.

Final Word Hopefully this book has helped stimulate your interest in health economics and in health care more generally.