Time: 10:45AM – 12:00PM, December 15
Venue: IB 1051
Host: Gergely Horvath, Associate Professor of Economics and Chair of the Division of Social Sciences, Duke Kunshan University
Speaker: Lyla Zhang, Associate Professor in Economics, Macquarie University
Speaker’s Bio: Dr Le (Lyla) Zhang is an experimental economist at Macquarie Business School. She specialises in utilising experimental economics methods and behavioural insights to study human decisions making. Her research agenda, combining the theory with experiments, focuses on social preferences, personnel economics, health economics and behavioural finance. Her research has been published in leading economics and management journals, such as Games and Economic Behavior, Experimental Economics, Journal of Economic Behavior and Organization, Production and Operations Management, Health Economics, Journal of Banking & Finance, etc. She is the Associate Director of Macquarie Business School Experimental Economics Laboratory. She is an Editorial Board Member of the Journal of Behavioral and Experimental Economics, Journal of Behavioral and Experimental Finance, and a Review Editor of Frontiers in Behavioral Economics. She received Australian Research Council Discovery Early Career Researcher Award.
Abstract: Health care is a credence good, and its market is plagued by asymmetric information. In this study, we use a laboratory experiment to investigate whether a two-part tariff pricing (TPT) and a separation of prescription and treatment activities (SPD) can mitigate the overtreatment issue. We observe a significant amount of overtreatment (and a smaller non-predicted amount of undertreatment) in our baseline environment. And the two-part tariff pricing is not effective in reducing overtreatment. In contrast, requiring a different than the treating physician to provide diagnosis and prescription for free is an effective way to reduce overtreatment in our laboratory setting. This effect, however, is partially offset by an increased frequency of undertreatment. Allowing prescription and treatment physicians to independently set prices for their services reduces efficiency due to coordination failures: in sum, prices are often higher than the expected benefit of patients, who in turn do not attend to the physician. Also, contrary to theory, bargaining power did not play a significant role in the distribution of profits between physicians.
