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on Contract Theory and Applications |
| By: | Brigham Frandsen; Michael Powell; James B. Rebitzer |
| Abstract: | We propose a "common-agency" model for explaining inefficient contracting in the U.S. healthcare system. In our setting, common-agency problems arise when multiple payers seek to motivate a shared provider to invest in improved care coordination. Our approach differs from other common-agency models in that we analyze "sticking points," that is, equilibria in which payers coordinate around Pareto-dominated contracts that do not offer providers incentives to implement efficient investments. These sticking points offer a straightforward explanation for three long observed but hard to explain features of the U.S. healthcare system: the ubiquity of fee-for-service contracting arrangements outside of Medicare; problematic care coordination; and the historic reliance on small, single specialty practices rather than larger multi-specialty group practices to deliver care. The common-agency model also provides insights on the effects of policies, such as Accountable Care Organizations, that aim to promote more efficient forms of contracting between payers and providers. |
| JEL: | D8 I10 I18 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23177&r=cta |
| By: | Péter Eső; Balázs Szentes |
| Abstract: | This paper generalizes a conceptual insight in dynamic contracting with quasilinear payoffs: the principal does not need to pay any information rents for extracting the agent's “new” private information obtained after signing the contract. This is shown in a general model in which the agent's type stochastically evolves over time, and her payoff (which is linear in transfers) depends on the entire history of private and any contractible information, contractible decisions, and her hidden actions. The contract is offered by the principal in the presence of initial informational asymmetry. The model can be transformed into an equivalent one where the agent's subsequent information is independent in each period (type orthogonalization). We show that for any fixed decision–action rule implemented by a mechanism, the agent's rents (as well as the principal's maximal revenue) are the same as if the principal could observe and contract on the agent's orthogonalized types after the initial period. We also show that any monotonic decision–action rule can be implemented in a Markovian environment satisfying certain regularity conditions, and we provide a simple “recipe” for solving such dynamic contracting problems. |
| JEL: | D82 D83 D86 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:69403&r=cta |
| By: | Mattheus Wassenaar (VU Amsterdam, The Netherlands); Raymond Gradus (VU Amsterdam, The Netherlands); Toon Molleman (Custodial Institutions Agency, The Netherlands) |
| Abstract: | Outsourcing of detention is a complex public task, due to quality risks from incomplete contracts, the public responsibility for sentencing and execution, and related social opinions. In the Netherlands, the debate about the outsourcing of prison services to the private profit sector has recently restarted. At the same time, in the Netherlands there is extensive experience of outsourcing prison services – in particular for juvenile detention and internal forensic psychiatric care – to nonprofit organizations. In the Dutch experience, we have not found differences between public and nonprofit execution, with respect to the type of contract with the prisons, costs and quality. The Dutch experience shows that outsourcing to nonprofit entrepreneurs in civil society can be an alternative to outsourcing to the private market. |
| Keywords: | nonprofit organizations; contracting out; prison services |
| JEL: | H40 L31 |
| Date: | 2017–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170023&r=cta |
| By: | Seung Han Yoo (Department of Economics, Korea University, Seoul, Republic of Korea) |
| Keywords: | Two types of information, Auction, Information structure |
| JEL: | C72 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:iek:wpaper:1702&r=cta |