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Seminario CEDE

Tuesday 24 September 2019, 12:30 - 13:45
by Hits : 1986

 

seminariocede2

Coautor: Philippe De Donder (Université du Québec à Montréal (UQAM))

Abstract:

Personalized medicine is still in its infancy, with costly genetic tests providing Little actionable information in terms of e¢ cient prevention decisions. As a consequence, few people undertake these tests currently, and health insurance contracts pool all agents irrespective of their genetic background. Cheaper and especially more informative tests will induce more people to undertake these tests and will impact not only the pricing but also the type of health insurance contracts. We develop a setting with endogenous prevention decisions and we study which contract type (pooling or separating) emerges at equilibrium as a function of the proportion of agents undertaking the genetic test as well as of the informativeness of this test.

Our results show that, ceteris paribus, the higher is the proportion of tested agents, the more likely is the emergence of a separating equilibrium that implies some risk discrimination. However, a better pooling contract in which policyholders undertake preventive actions (and lower their health risk) can be attained if the informativeness of the genetic tests increases su¢ ciently. Once the proportion of tested individuals reaches a threshold, we move abruptly from pooling to separating equilibrium, which unambiguously decreases social welfare. Once the equilibrium is of the separating type, social welfare increases with the genetic tests take-up rate, thanks to a composition e¤ect.

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seminariocede2

Coautores: Amalia R. Miller (University of Virginia IZA and NBER) y Carmit Segal (University of Zurich)

Abstract:

This paper develops a novel field experiment to test the implicit prediction of tournament theory that competition increases work time and can therefore contribute to the long work hours required in elite occupations. A majority of workers in the treatment without explicit financial incentives worked past the minimum time, but awarding a tournament prize increased work time and effort by over 80% and lowered costs of effort or output by over a third. Effort was similar with alternative (piece rate, low-prize tournament) bonuses. Men worked longer than women in the high-prize tournament, but for the same duration in other treatments

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