Design, Incentives and Outcomes: Essays on Allocation Under Constraints
(2025)- Abstract
- This thesis comprises three self-contained chapters that explore how individual behavior, incentives, and institutional frameworks shape the allocation of scarce resources, with particular emphasis on healthcare markets.
The first chapter examines the impact of intrinsic truth-telling preferences on consumer welfare within a priority pricing mechanism, in which individuals can gain faster access to services by paying a higher fee. While traditional models assume fully strategic behavior, empirical evidence increasingly points to an intrinsic preference for truth-telling. I develop a theoretical model showing that priority pricing yields higher welfare relative to uniform pricing only when the proportion of non-truthful agents exceeds... (More) - This thesis comprises three self-contained chapters that explore how individual behavior, incentives, and institutional frameworks shape the allocation of scarce resources, with particular emphasis on healthcare markets.
The first chapter examines the impact of intrinsic truth-telling preferences on consumer welfare within a priority pricing mechanism, in which individuals can gain faster access to services by paying a higher fee. While traditional models assume fully strategic behavior, empirical evidence increasingly points to an intrinsic preference for truth-telling. I develop a theoretical model showing that priority pricing yields higher welfare relative to uniform pricing only when the proportion of non-truthful agents exceeds a critical threshold. An online experiment further reveals that the welfare effects depend not only on incentives created by the pricing structures and truth-telling preferences but also on individuals’ beliefs about others’ truthfulness. This contributes to a more nuanced understanding of how behavioral preferences and belief heterogeneity shape the welfare outcomes of pricing mechanisms.
The second chapter investigates how the design of the pricing scheme influences cost containment and patient selection under prospective payment systems, where providers are reimbursed a fixed price that does not vary with the volume or intensity of services delivered. We develop a theoretical model in which heterogeneous users are served by both public and private providers. Private providers can select which patients to serve, while public providers must accept all applicants. We show that total costs in such a setting depend on the number of prices used. Using the Swedish personal assistance system as a motivating example, we conduct a numerical analysis demonstrating that modest changes to a single-price system can generate substantial cost savings. These results offer practical guidance for designing payment schemes that promote cost-efficiency.
The third chapter examines the trade-off between equity—ensuring fair distribution—and efficiency—treating the largest number of patients—in allocating blood supply across different blood types. While allowing patients to receive blood from any compatible type can promote equitable access, it may reduce the total number of patients treated. I derive a criterion under which pooling compatible blood types improves equity without sacrificing efficiency, and demonstrate how it can be incorporated into iterative pooling procedures. This offers guidance for balancing equity and efficiency in the allocation of blood supply. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/ceacfb33-55d7-4dc8-b901-1203ea687fa2
- author
- Thami, Prakriti LU
- supervisor
-
- Tommy Andersson LU
- Pol Campos LU
- opponent
-
- Professor Nosenzo, Daniele, Aarhus University
- organization
- publishing date
- 2025
- type
- Thesis
- publication status
- published
- subject
- keywords
- priority pricing, consumer welfare, truth-telling behavior, incentive-compatible pricing, OR in health services, personal assistance, public and private providers, multiple pricing, welfare, dumping, equity-efficiency trade-off, ABO-compatibility, blood allocation, market design
- pages
- 176 pages
- publisher
- Lund University
- defense location
- EC3:207
- defense date
- 2025-06-04 13:00:00
- ISBN
- 978-91-8104-528-4
- 978-91-8104-527-7
- language
- English
- LU publication?
- yes
- id
- ceacfb33-55d7-4dc8-b901-1203ea687fa2
- date added to LUP
- 2025-05-08 22:38:29
- date last changed
- 2025-05-09 13:38:02
@phdthesis{ceacfb33-55d7-4dc8-b901-1203ea687fa2,
abstract = {{This thesis comprises three self-contained chapters that explore how individual behavior, incentives, and institutional frameworks shape the allocation of scarce resources, with particular emphasis on healthcare markets. <br/>The first chapter examines the impact of intrinsic truth-telling preferences on consumer welfare within a priority pricing mechanism, in which individuals can gain faster access to services by paying a higher fee. While traditional models assume fully strategic behavior, empirical evidence increasingly points to an intrinsic preference for truth-telling. I develop a theoretical model showing that priority pricing yields higher welfare relative to uniform pricing only when the proportion of non-truthful agents exceeds a critical threshold. An online experiment further reveals that the welfare effects depend not only on incentives created by the pricing structures and truth-telling preferences but also on individuals’ beliefs about others’ truthfulness. This contributes to a more nuanced understanding of how behavioral preferences and belief heterogeneity shape the welfare outcomes of pricing mechanisms. <br/><br/>The second chapter investigates how the design of the pricing scheme influences cost containment and patient selection under prospective payment systems, where providers are reimbursed a fixed price that does not vary with the volume or intensity of services delivered. We develop a theoretical model in which heterogeneous users are served by both public and private providers. Private providers can select which patients to serve, while public providers must accept all applicants. We show that total costs in such a setting depend on the number of prices used. Using the Swedish personal assistance system as a motivating example, we conduct a numerical analysis demonstrating that modest changes to a single-price system can generate substantial cost savings. These results offer practical guidance for designing payment schemes that promote cost-efficiency. <br/><br/>The third chapter examines the trade-off between equity—ensuring fair distribution—and efficiency—treating the largest number of patients—in allocating blood supply across different blood types. While allowing patients to receive blood from any compatible type can promote equitable access, it may reduce the total number of patients treated. I derive a criterion under which pooling compatible blood types improves equity without sacrificing efficiency, and demonstrate how it can be incorporated into iterative pooling procedures. This offers guidance for balancing equity and efficiency in the allocation of blood supply.}},
author = {{Thami, Prakriti}},
isbn = {{978-91-8104-528-4}},
keywords = {{priority pricing; consumer welfare; truth-telling behavior; incentive-compatible pricing; OR in health services; personal assistance; public and private providers; multiple pricing; welfare; dumping; equity-efficiency trade-off; ABO-compatibility; blood allocation; market design}},
language = {{eng}},
publisher = {{Lund University}},
school = {{Lund University}},
title = {{Design, Incentives and Outcomes: Essays on Allocation Under Constraints}},
url = {{https://lup.lub.lu.se/search/files/218784323/Prakriti_Thami_-_THESIS.pdf}},
year = {{2025}},
}