IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-01618043.html
   My bibliography  Save this paper

Regulation and altruism

Author

Listed:
  • Izabela Jelovac

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Samuel Kembou Nzale

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

We study optimal contracts in a regulator-agent setting with joint production, altruistic and selfish agents, and uneasy outcome measurement. Such a setting represents sectors of activities such as education and health care provision. The agents and the regulator jointly produce an outcome for which they all care to some extent that is varying from agent to agent. Some agents, the altruistic ones, care more than the regulator does while others, the selfish agents, care less. Moral hazard is present due to the agent's effort that is not contractible. Adverse selection is present too since the regulator cannot a priori distinguish between altruistic and selfish agents. Contracts consist of a simple transfer from the regulator to the agents together with the regulator's input in the joint production. We show that a screening contract is not optimal when we face both moral hazard and adverse selection.

Suggested Citation

  • Izabela Jelovac & Samuel Kembou Nzale, 2020. "Regulation and altruism," Post-Print halshs-01618043, HAL.
    • Handle: RePEc:hal:journl:halshs-01618043
    DOI: 10.1111/jpet.12368
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01618043
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-01618043/document
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jpet.12368?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Liu, Ting & Ma, Ching-to Albert, 2013. "Health insurance, treatment plan, and delegation to altruistic physician," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 79-96.
    2. Chalkley, Martin & Malcomson, James M., 1998. "Contracting for health services when patient demand does not reflect quality," Journal of Health Economics, Elsevier, vol. 17(1), pages 1-19, January.
    3. Inés Macho-Stadler & David Pérez-Castrillo, 2018. "Moral hazard: Base models and two extensions," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume I, chapter 16, pages 453-485, Edward Elgar Publishing.
    4. Jeannette Brosig‐Koch & Heike Hennig‐Schmidt & Nadja Kairies‐Schwarz & Daniel Wiesen, 2017. "The Effects of Introducing Mixed Payment Systems for Physicians: Experimental Evidence," Health Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 243-262, February.
    5. Jelovac, Izabela & Macho-Stadler, Ines, 2002. "Comparing organizational structures in health services," Journal of Economic Behavior & Organization, Elsevier, vol. 49(4), pages 501-522, December.
    6. Florence Naegelen & Michel Mougeot, 2011. "Power of Incentives with Motivated Agents in Public Organizations," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(3), pages 391-416, June.
    7. repec:dau:papers:123456789/5991 is not listed on IDEAS
    8. Stephen W. Salant, 1989. "When is Inducing Self-Selection Suboptimal for a Monopolist?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(2), pages 391-397.
    9. Michael Kuhn & Luigi Siciliani, 2009. "Performance Indicators for Quality with Costly Falsification," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1137-1154, December.
    10. repec:zbw:rwirep:0507 is not listed on IDEAS
    11. repec:dau:papers:123456789/5993 is not listed on IDEAS
    12. Kairies-Schwarz, Nadja, 2014. "Altruism Heterogeneity and Quality Competition Among Healthcare Providers," Ruhr Economic Papers 507, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    13. A. Michael Spence, 1980. "Multi-Product Quantity-Dependent Prices and Profitability Constraints," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(5), pages 821-841.
    14. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    15. Jack, William, 2005. "Purchasing health care services from providers with unknown altruism," Journal of Health Economics, Elsevier, vol. 24(1), pages 73-93, January.
    16. Gary Biglaiser & Ching-to Albert Ma, 2007. "Moonlighting: public service and private practice," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1113-1133, December.
    17. Spence, Michael, 1977. "Nonlinear prices and welfare," Journal of Public Economics, Elsevier, vol. 8(1), pages 1-18, August.
    18. Michel Mougeot & Florence Naegelen, 2014. "Asymmetric Information and Pooling Contracts in the Hospital Sector," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(2), pages 365-386.
    19. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
    20. Botond Köszegi, 2014. "Behavioral Contract Theory," Journal of Economic Literature, American Economic Association, vol. 52(4), pages 1075-1118, December.
    21. Barigozzi, Francesca & Burani, Nadia, 2016. "Competition and screening with motivated health professionals," Journal of Health Economics, Elsevier, vol. 50(C), pages 358-371.
    22. Dor, Avi & Watson, Harry, 1995. "The hospital-physician interaction in U.S. hospitals: Evolving payment schemes and their incentives," European Economic Review, Elsevier, vol. 39(3-4), pages 795-802, April.
    23. Nancy L. Stokey, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(3), pages 355-371.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bardey, David & Kembou, Samuel & Ventelou, Bruno, 2021. "Physicians’ incentives to adopt personalised medicine: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 686-713.
    2. Nicolas Quérou & Antoine Soubeyran & Raphael Soubeyran, 2020. "Contracting under unverifiable monetary costs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 892-909, October.
    3. François Maréchal & Lionel Thomas, 2021. "The impact of medical complications on optimal hospital payment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1144-1173, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Izabela Jelovac & Samuel Kembou Nzale, 2017. "Regulation and Altruism," Working Papers halshs-01616193, HAL.
    2. François Maréchal & Lionel Thomas, 2021. "The impact of medical complications on optimal hospital payment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1144-1173, December.
    3. Tóbiás, Áron, 2018. "Non-linear pricing and optimal shipping policies," Games and Economic Behavior, Elsevier, vol. 112(C), pages 194-218.
    4. Chae, Suchan, 2003. "Can time preference be an instrument for price discrimination?," Economics Letters, Elsevier, vol. 81(2), pages 173-177, November.
    5. Qiu_Hong Wang & Kai-Lung Hui, 2005. "Technology Timing and Pricing In the Presence of an Installed Base," Industrial Organization 0512013, University Library of Munich, Germany.
    6. Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(4), pages 333-349, June.
    7. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, September.
    8. Yonghong Sun, 2020. "Optimal service versioning for dating platforms," Information Technology and Management, Springer, vol. 21(4), pages 217-226, December.
    9. Han, Johann & Kairies-Schwarz, Nadja & Vomhof, Markus, 2020. "Quality provision in competitive health care markets: Individuals vs. teams," Ruhr Economic Papers 839, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Kevin E. Pflum, 2015. "Physician Incentives and Treatment Choice," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(4), pages 712-751, October.
    11. Francisco Martínez-Sánchez, 2016. "Versioning Goods and Joint Purchase: Substitution and Complementarity Strategies," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(5), pages 577-590.
    12. Veiga, André, 2018. "A note on how to sell a network good," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 114-126.
    13. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    14. Michael Kuhn & Luigi Siciliani, 2009. "Performance Indicators for Quality with Costly Falsification," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1137-1154, December.
    15. Allard, Marie & Jelovac, Izabela & Léger, Pierre Thomas, 2011. "Treatment and referral decisions under different physician payment mechanisms," Journal of Health Economics, Elsevier, vol. 30(5), pages 880-893.
    16. Joan Calzada & Tommaso M. Valletti, 2012. "Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions," Marketing Science, INFORMS, vol. 31(4), pages 649-667, July.
    17. Galina Besstremyannaya & Sergei Golovan, 2019. "Physician’s altruism in incentive contracts: Medicare’s quality race," CINCH Working Paper Series 1903, Universitaet Duisburg-Essen, Competent in Competition and Health.
    18. Makoto Kakinaka & Ryuta Kato, 2013. "Regulated medical fee schedule of the Japanese health care system," International Journal of Health Economics and Management, Springer, vol. 13(3), pages 301-317, December.
    19. B. P. S. Murthi & Sumit Sarkar, 2003. "The Role of the Management Sciences in Research on Personalization," Management Science, INFORMS, vol. 49(10), pages 1344-1362, October.
    20. Frank Yang, 2022. "The Simple Economics of Optimal Bundling," Papers 2212.12623, arXiv.org, revised Apr 2023.

    More about this item

    Keywords

    altruism; regulator-agent joint production; moral hazard; adverse selection;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-01618043. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.