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Structural estimation of a principal-agent model: moral hazard in medical insurance

Vera-Hernandez, M; (2003) Structural estimation of a principal-agent model: moral hazard in medical insurance. RAND J ECON , 34 (4) 670 - 693. Green open access

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Abstract

Despite the importance of principal-agent models in the development of modern economic theory, there are few estimations of these models. I recover the estimates of a principal-agent model and obtain an approximation to the optimal contract. The results show that out-of-pocket payments follow a concave profile with respect to costs of treatment. I estimate the welfare loss due to moral hazard, taking into account income effects. I also propose a new measure of moral hazard based on the conditional correlation between contractible and noncontractible variables.

Type: Article
Title: Structural estimation of a principal-agent model: moral hazard in medical insurance
Open access status: An open access version is available from UCL Discovery
Publisher version: https://editorialexpress.com/cgi-bin/rje_online.cg...
Language: English
Keywords: EXCESS HEALTH-INSURANCE, PAYROLL RECORDS, WELFARE LOSS, ACCESS VALUE, CARE, DEMAND, UNCERTAINTY, RISK, ECONOMICS, DEDUCTIBLES
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/4097
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