Information and Quality When Motivation is Intrinsic: Evidence from Surgeon Report Cards

If profit maximization is the objective of a firm, new information about quality should affect firm behavior only through its effects on market demand. I consider an alternate model in which suppliers are motivated by a desire to perform well in addition to profit. The introduction of quality "...

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Bibliographic Details
Published inThe American economic review Vol. 103; no. 7; pp. 2875 - 2910
Main Author Kolstad, Jonathan T.
Format Journal Article
LanguageEnglish
Published Nashville American Economic Association 01.12.2013
Subjects
Coefficients
Consumers
Coronary artery bypass
Demand change
Economic behaviour
Economic incentives
Economic models
Economics
Health care expenditures
Health care industry
Health outcomes
Mortality
Motivation
Pennsylvania
Physicians
Profit maximization
Quality of care
Report cards
Studies
Surgeons
Surgery
U.S.A
Utility functions
United States > US
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Summary:If profit maximization is the objective of a firm, new information about quality should affect firm behavior only through its effects on market demand. I consider an alternate model in which suppliers are motivated by a desire to perform well in addition to profit. The introduction of quality "report cards " for cardiac surgery in Pennsylvania provides an empirical setting to isolate the relative role of extrinsic and intrinsic incentives in determining surgeon response. Information on performance that was new to surgeons and unrelated to patient demand led to an intrinsic response four times larger than surgeon response to profit incentives.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0002-8282
1944-7981
DOI:10.1257/aer.103.7.2875