Rewards for Information Provision in Patient Referrals : A Theoretical Model and an Experimental Test

We study whether bonus payments for information provision can improve the information flow between physicians. A primary care physician (PCP) decides on the provision of information of varying qualities to a specialist while referring a patient. Our theoretical model, which includes altruism and loss aversion, predicts that bonus payments increase the provision of both high- and low-quality information. Running a controlled laboratory experiment we find support for this prediction. If the beneficiary of information provision receives a higher payoff than the PCP, we observe that PCPs more often pass on high-quality information when the beneficiary is a patient. If the beneficiary receives a lower payoff than the PCP, the type of the beneficiary (specialist or patient) does not affect the provision of high-quality information