Paying Attention or Paying Too Much in Medicare Part D

Ketcham, Jonathan D.; Lucarelli, Claudio; Powers, Christopher A.

doi:10.1257/aer.20120651

Cited by 69 publications

(56 citation statements)

References 56 publications

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“…Gruber (2011, 2016);Ho, Hogan, and Scott Morton (2017); Ketcham, Lucarelli, and Powers (2015) Consumers leave money on the table in initial Medicare Part D choices, on average ~$300 per consumer.…”

Section: Mental Gapsmentioning

confidence: 99%

Frictions or Mental Gaps: What's Behind the Information We (Don't) Use and When Do We Care?

Handel

Schwartzstein²

2018

Journal of Economic Perspectives

159

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In a number of situations, there is strong evidence that people do not translate readily available information into the knowledge that would help them make better decisions. For example, people may choose a health insurance plan that costs $500 per year more in premiums in order to obtain a deductible that is $250 lower-despite having access to open enrollment booklets containing relevant information (Handel 2013;Bhargava, Loewenstein, and Sydnor 2017). People buy branded drugs over equivalent but less-expensive generics (Bronnenberg, Dubé, Gentzkow, and Shapiro 2015) even though information printed on the package reveals their equivalence. Investors pay a range of fees for investing in S&P 500 index funds-and index funds with higher fees have meaningful market shares (Hortaçsu and Syverson 2004). Consumers appear to demand the wrong cell phone plans given their previous usage patterns (Grubb and Osborne 2015).Why don't people use available information? The many possibilities discussed in the research literature broadly fall into two camps, which we refer to as frictions and mental gaps. The frictions camp focuses on costs of acquiring and processing information. A consumer shopping in a health insurance exchange incurs a cost to explore more of the options in the choice set and to assess them. This camp, and the closely related framework of "rational inattention," maintains the neoclassical assumption that people form accurate beliefs using the information that is worth

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Section: Mental Gapsmentioning

confidence: 99%

Frictions or Mental Gaps: What's Behind the Information We (Don't) Use and When Do We Care?

Handel

Schwartzstein²

2018

Journal of Economic Perspectives

159

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“…Part D is split into 34 geographic markets. They 3 Other papers on choice rationality in Medicare Part D are: Heiss, McFadden, and Winter (2010); Heiss et al (2013); Gruber (2011, 2013); Kesternich et al (2013); Ketcham et al (2012); Kling et al (2012); Ketcham, Lucarelli, and Powers (2015); Bundorf et al (2013); Bundorf and Szrek (2010); Bundorf (2011, 2014); Zhou and Zhang (2012). 4 Other work in Medicare Part D has looked at prescription drug consumption (Yin et al 2008, Duggan and Scott Morton 2010, Ketcham and Simon 2008; the role of subsidies (Decarolis 2015;Decarolis, Polyakova, and Ryan 2015); the welfare of reducing choice or adding a public option (Lucarelli, Prince, and Simon 2012;Miller and Yeo 2015a); risk adjustment (Carey 2015); moral hazard (Einav, Finkelstein, and Schrimpf 2015), and myopia (Abaluck, Gruber, and Swanson 2015;Dalton, Gowrisankaran, and Town 2015).…”

Section: Institutional Setting and Datamentioning

confidence: 99%

Regulation of Insurance with Adverse Selection and Switching Costs: Evidence from Medicare Part D

Polyakova

2016

American Economic Journal: Applied Economics

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I take advantage of the evolution of the regulatory and pricing environment in the first years of a large federal prescription drug insurance program for seniors-Medicare Part D-to empirically explore interactions among adverse selection, switching costs, and regulation. Using detailed administrative data, I document evidence of both adverse selection of beneficiaries across contracts and switching costs for beneficiaries in changing contracts within Medicare Part D. Motivated by this descriptive evidence, I formulate a model of contract choice that allows for both switching costs and private information about expected risk. Using this model, I show that switching costs are large and have quantitatively important implications for the sorting of individuals among contracts. How switching costs affect selection over time depends on the direction of changes in the contract space relative to the initial conditions. I find that in the present environment, on net, switching costs help sustain an adversely-selected equilibrium with large differences in risks between more and less generous contracts. I then simulate how switching costs could affect regulatory interventions that change the generosity of contracts. For example, I consider the tightening of the minimum standard requirement by "filling" the Part D donut hole as implemented under the Affordable Care Act. I find that absent any switching costs, this regulation would have eliminated the differences in risks across contracts; however, in the presence of the switching costs that I estimate, the effect of the policy is largely muted. JEL classification numbers: D12, I13, I18, G22

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“…Works related to managing attention of consumers are presented by M. Yusufcan (2012) [4], D. Hassoun (2012) [8], X. Gabaix (2014) [9] and J. Ketcham (2015) [10].The theory of biorhythms was developed in 1974 by G. Svoboda, V. Fliess and F. Telcher. The modern development of the theory applicable to management is presented in the works by H. Vaizivedast (2013) [15], H. Safarzadeh, F. Haghshenas Kashani, and M. E. Sabaghi Nadooshan (2014) [14] and others.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

Innovative methods of managing consumer behaviour in the economy of impressions, or the experience economy

Пушкар¹,

Tataryntseva²,

Другова³

2017

EA-XXI

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Abstract. In the conditions of digital marketing development, the main problem of the development of enterprise business is management of consumer behaviour in the online environment. Enterprises should find new ways to attract and retain the attention of users. The purpose of the article is to develop recommendations for managing consumer behaviour in the economy of impressions, or the experience economy based on personalisation. The following research methods are used: analysis and synthesis, logical generalisation, abstract logic and the hypothetic-deductive method. The article formulates a hypothesis based on the phenomenon of the dependence of a person's emotional response on the phase of his/her biological rhythm already in use in the practice of communication management and psychology. To partially confirm the hypothesis, a pilot experiment was prepared and conducted on the basis of the social network Facebook in 2017. The respondents were presented with an advertising multimedia product with a subsequent assessment of the emotional state. The received statistical results confirm the accepted hypothesis. Based on the hypothetic-deductive method, recommendations for managing consumer behaviour in the economy of impressions have been developed. The essence of recommendations is reduced to how to take into account the phases of human biological rhythms, as well as the choice of intellectual and emotional filling of the multimedia advertising product. Taking into account the personalisation processes, the models of users' perception of advertising are modified. The process of users' perception of the content, its impressions and emotions lie in interrelation with its biological rhythms. If the developer knows the data about the activity of the emotional and intellectual biorhythms of the user, it becomes possible to control impressions, passing the relevant content in the most favourable periods for perception. Practical application of the proposed recommendations will be useful for companies that carry out advertising activities in social networks that implement contextual advertising and direct marketing. Keywords: Impressions; Experience; Economy of Impressions; Experience Economy; Personalisation; Theory of Human Biological Cycles; Management; Emotional and Intellectual Content JEL Classіfіcatіon: M31 DOI: https://doi.org/10.21003/ea.V165-23 Пушкар О. І. доктор економічних наук, професор, завідувач кафедри комп'ютерних систем і технологій, Харківський національний економічний університет ім. С. Кузнеця, Харків, Україна Курбатова Ю. Л. кандидат економічних наук, доцент, кафедра менеджменту ЗЕД і фінансів, Національний технічний університет «Харківський політехнічний інститут», Харків, Україна Другова О. С. кандидат економічних наук, доцент, кафедра менеджменту ЗЕД і фінансів, Національний технічний університет «Харківський політехнічний інститут», Харків, Україна Інноваційні методи управління поведінкою споживачів в економіці вражень Анотація У статті сформульовано гіпотезу про управління споживацькою пове...

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Paying Attention or Paying Too Much in Medicare Part D

Cited by 69 publications

References 56 publications

Frictions or Mental Gaps: What's Behind the Information We (Don't) Use and When Do We Care?

Frictions or Mental Gaps: What's Behind the Information We (Don't) Use and When Do We Care?

Regulation of Insurance with Adverse Selection and Switching Costs: Evidence from Medicare Part D

Innovative methods of managing consumer behaviour in the economy of impressions, or the experience economy

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