Working Paper: NBER ID: w18804
Authors: Jonathan T. Kolstad
Abstract: 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.
Keywords: quality reporting; intrinsic motivation; surgeon performance; health care quality
JEL Codes: I10; I11; I18; L15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Intrinsic motivations (O31) | Profit incentives (L21) |
| Changes in patient severity (I12) | Surgeon performance (I11) |
| Intrinsic motivations (O31) | Surgeon performance (I11) |
| Quality report cards (Y10) | Intrinsic motivations (O31) |
| Quality report cards (Y10) | Surgeon performance (I11) |
| Profit incentives (L21) | Surgeon performance (I11) |