KMID : 0387319980080010266
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Korean Journal of Health Policy and Administration 1998 Volume.8 No. 1 p.266 ~ p.282
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Reputation and Disenrollment [Role of Consumer Information in Health Insurance Markets]
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Kwon Soon-Man
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Abstract
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We model that separation is a rational decision to resolve the inherent uncertainty about quality from the matching process. In health insurance markets, quality of services is revealed to consumers only after enrollment. Discrepancies between the expected and realized quality lead utility-maximizing enrollees to disenroll if they find a better alternative. Accordingly, factors that reduce this discrepancy will decrease disenrollment. The firm-level empirical analysis shows that disenrollment is relatively small in markets where the reputation effect works efficiently because consumers can predict the expected quality accurately.
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