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Multi‐tasking, quality and pay for performance
Author(s) -
Kaarboe Oddvar,
Siciliani Luigi
Publication year - 2011
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.1582
Subject(s) - verifiable secret sharing , dimension (graph theory) , quality (philosophy) , economics , computer science , microeconomics , econometrics , mathematics , set (abstract data type) , philosophy , epistemology , pure mathematics , programming language
We present a model of optimal contracting between a purchaser and a provider of health services when quality has two dimensions. We assume that: (i) the provider is (at least to some extent) altruistic; (ii) one dimension of quality is verifiable (dimension 1) and one dimension is not verifiable (dimension 2); (iii) the two quality dimensions can be either substitutes or complements. Our main result is that setting the price equal to the marginal benefit of the verifiable quality dimension can be optimal even if the two quality dimensions are substitutes. Copyright © 2010 John Wiley & Sons, Ltd.