Daniel Wiesen

Testing for Prudence and Skewness Seeking

Numerous theoretical predictions such as precautionary saving or preventive behavior have been derived for prudent decision makers. Further, prudence can be characterized as downside risk aversion and plays a key role in preference for skewness. We use a simple experimental method to test for prudence and skewness preference in the laboratory and compare the two. To this end, we introduce a novel graphical representation of compound lotteries that is easily accessible to subjects and test it for robustness, using a factorial design. Prudence is observed on the aggregate and individual level. We find that prudence does not boil down to skewness seeking. We further provide some theoretical explanations for this result. This paper was accepted by Peter Wakker, decision analysis.

How Effective are Pay-for-Performance Incentives for Physicians? - A Laboratory Experiment

Recent reforms in health care have introduced a variety of pay-for-performance programs using financial incentives for physicians to improve the quality of care. Their effectiveness is, however, ambiguous as it is often difficult to disentangle the effect of financial incentives from the ones of various other simultaneous changes in the system. In this study we investigate the effects of introducing financial pay-for-performance incentives with the help of controlled laboratory experiments. In particular, we use fee-for-service and capitation as baseline payment schemes and test how additional pay-for-performance incentives affect the medical treatment of different patient types. Our results reveal that, on average, patients significantly benefit from introducing pay-forperformance, independently of hether it is combined with capitation or fee-for-service incentives. The magnitude of this effect is significantly influenced by the patient type, though. These results hold for medical and non-medical students. A cost-benefit analysis further demonstrates that, overall, the increase in patient benefits cannot overcompensate the additional costs associated with pay-for-performance. Moreover, our analysis of individual data reveals different types of responses to pay-for-performance incentives. We find some indication that pay-forperformance might crowd out the intrinsic motivation to care for patients. These insights help to understand the effects caused by introducing pay-for-performance schemes.

Dishonesty in Healthcare Practice: A Behavioral Experiment on Upcoding in Neonatology

We introduce a controlled behavioral experiment framed in a neonatal care context to analyze the effect of introducing a random audit and fines on individuals’ honesty in a simple reporting task. Our behavioral data provide new evidence on dishonesty and upcoding in health care. We find that introducing audits combined with a fine significantly reduces dishonesty on aggregate. The effect is driven by a significant reduction in upcoding. At the same time, dishonest choices that cannot be detected as fraudulent by an audit (partial dishonesty) increase. We also find evidence that individual characteristics such as gender, medical background, and integrity are related to dishonest behavior.

Do Good and Talk About It! Disclosure and Reward of Discretionary Kindness

We analyze the consequences of endogenous disclosure of discretionary kind behavior in a two player game with asymmetric information. The first player’s choice set, which is his private information, is randomly determined; he can either behave kindly or unkindly towards the second player (kindness is discretionary) or he is restricted to kind behavior. At some cost, the first player can truthfully inform the second player about the available choice set. We find that first players who behave kindly more often inform the second player if their kindness is discretionary. Endogenously disclosing discretionary kindness significantly triggers second players’ rewards. Our findings are robust towards variations in first players’ costs of disclosure and second players’ payoffs. Behavioral findings translate into a variety of real-world settings.

Behavioural experiments in health: An introduction

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Kickbacks, Referrals and Efficiency in Health Care Markets: Experimental Evidence

Abstract How referral fees affect primary care physicians’ behavior is not well understood. We conduct a behavioral experiment on referral fees in which subjects take on the role of physicians. An illustrative theoretical model guides our experimental design and the formulation of behavioral hypotheses for heterogeneously altruistic physician-types. We exogenously vary the level of referral fees paid by specialists to primary care physicians and study the impact of these fees on primary care physicians’ diagnostic effort and referrals. In a separate experimental task, we evaluate primary care physicians’ altruism. In line with our model, introducing medium-sized referral fees significantly increases referrals made by barely altruistic primary care physicians of patients who need specialist treatment, when compared to the baseline without referral fees. High referral fees significantly increase referrals irrespective of physicians’ level of altruism. Surprisingly, diagnostic effort is not significantly affected by referral fees. Implications for economic efficiency are discussed.