Ruhr Economic Papers

Ruhr Economic Papers #331

P4P, Reputation and the Reduction of Costly Overprovision

by Nadja Kairies-Schwarz

University of Duisburg-Essen, 04/2012, 17 S./p., 8 Euro, ISBN 978-3-86788-380-1 DOI: 10.4419/86788380



We investigate the effect of reputational motivation on output in a scenario of overprovision of medical treatment. We assume that physicians differ in their degree of altruism, enjoy being perceived as good but dislike being perceived as greedy. We show that better reputational motivation unambiguously reduces the costs of healthcare provision and the magnitude of overprovision which in turn rises patient benefits.

JEL-Classification: D64, I11, I18, H42

Keywords: Altruism; performance; motivation