Estimating price sensitivity of economic agents using discontinuity in nonlinear contracts

• 成果类型: Article
• 署名作者: Bajari, Patrick; Hong, Han; Park, Minjung; Town, Robert
• 署名单位: University of Washington; University of Washington Seattle; National Bureau of Economic Research; Stanford University; University of California System; University of California Berkeley; University of Texas System; University of Texas Austin
• 刊物名称: QUANTITATIVE ECONOMICS
• ISSN/ISSBN: 1759-7323
• DOI: 10.3982/QE602
• 发表日期: 2017
• 页码: 397-433
• 关键词: Nonlinear contracts; heterogeneity in price sensitivity; health care

摘要

This paper proposes a method to estimate price sensitivity of economic agents exploiting discontinuity in nonlinear contracts. As an application, we study contracts between a managed care organization and hospitals for organ transplants. Exploiting donut holes in the reimbursement contracts, we show that the impact of the reimbursement rate on hospitals' provision of health care services varies significantly across patients with different levels of illness severity. Our methodology is applicable to important classes of models such as consumer choice under nonlinear pricing and contracting with nonlinear incentives.