More from these Authors

• Working Paper | 2019

  Using Models to Persuade

  Joshua Schwartzstein and Adi Sunderam

  Citation:

  Schwartzstein, Joshua, and Adi Sunderam. "Using Models to Persuade." Working Paper, March 2019.  View Details

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• Chapter | Handbook of Behavioral Economics | 2019

  Behavioral Economics and Health-Care Markets

  Amitabh Chandra, Benjamin Handel and Joshua Schwartzstein

  This chapter summarizes research in behavioral health economics, focusing on insurance markets and product markets in health care. We argue that the prevalence of choice difficulties and biases leading to mistakes in these markets establish a special place for them in economic analysis. In addition, we argue that while the behavioral health-economics literature has done a better job documenting consumer-choice mistakes in insurance and treatment choices than explaining why those mistakes occur, it is clear that we should not ignore these mistakes in our analyses. We document evidence showing that consumers leave lots of money on the table in their insurance-plan choices, sometimes thousands of dollars. This is true both when consumers make active choices (e.g., they do not have a default plan) and when they make passive choices (e.g., they have a default plan). We discuss the implications of this body of work for the design and regulation of insurance markets, including the interaction between consumer choice difficulties or biases and adverse selection. We then document evidence on consumer mistakes in health-care utilization and treatment choices, especially in response to changes in prices such as copayments and deductibles. We show how choice difficulties or biases may lead patients to respond to such increases in patient cost-sharing by reducing demand for high-value care, muddying the traditional argument that the price elasticity of demand for medical care meaningfully captures the degree of moral hazard. We conclude with directions for future research.

  Keywords: Behavioral economics; Consumer Behavior; Economics; Health Care and Treatment; Insurance; Markets;

  Citation:

  Chandra, Amitabh, Benjamin Handel, and Joshua Schwartzstein. "Behavioral Economics and Health-Care Markets." In Handbook of Behavioral Economics: Foundations and Applications 2, edited by B. Douglas Bernheim, Stefano DellaVigna, and David Laibson. Amsterdam: Elsevier/North-Holland, 2019.  View Details

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• Article | Journal of Applied Psychology | November 2018

  Worthy of Swift Trust? How Brief Interpersonal Contact Affects Trust Accuracy

  Oliver Schilke and Laura Huang

  Organizational scholars have long underscored the positive consequences of trust, yet trust can also have dysfunctional effects if it is not placed wisely. Though much research has examined conditions that increase individuals’ tendencies to trust others, we know very little about the circumstances under which individuals are likely to make more accurate trust decisions (i.e., neither misplace their trust nor refrain from trusting when doing so would have been beneficial), especially when they must do so rapidly and in the absence of an exchange history. Put simply, we have little understanding of what drives the accuracy of swift trust judgments. Building on relevant literatures, we propose that short episodes of prior interpersonal contact with a partner can increase the accuracy of swift trust decisions. Across two experimental studies, we demonstrate that brief interpersonal contact leads trustors to both (a) become more accurate in their trust decisions and (b) engage in other-focused perspective taking, which mediates the effect of interpersonal contact on trust accuracy. We then show that it is specifically because of verbal cues, rather than visual cues, that brief interpersonal contact enables other-focused perspective taking and, in turn, trust accuracy (Study 3). We contribute to the literature on trust by examining trust accuracy (rather than mere trust levels), identifying the significant role of brief interpersonal contact, and revealing other-focused perspective taking as a key mechanism in accurate swift trust decisions.

  Keywords: Trust; Interpersonal Communication; Judgments; Perspective;

  Citation:

  Schilke, Oliver, and Laura Huang. "Worthy of Swift Trust? How Brief Interpersonal Contact Affects Trust Accuracy." Journal of Applied Psychology 103, no. 11 (November 2018): 1181–1197.  View Details

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