Regression Discontinuity Designs with an Endogenous Forcing Variable and an Application to Contracting in Health Care / Patrick Bajari, Han Hong, Minjung Park, Robert Town.

Format:

Book

Author/Creator:

Bajari, Patrick.

Contributor:

National Bureau of Economic Research.

Hong, Han.

Park, Minjung.

Town, Robert.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17643.

NBER working paper series no. w17643

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

Regression discontinuity designs (RDDs) are a popular method to estimate treatment effects. However, RDDs may fail to yield consistent estimates if the forcing variable can be manipulated by the agent. In this paper, we examine one interesting set of economic models with such a feature. Specifically, we examine the case where there is a structural relationship between the forcing variable and the outcome variable because they are determined simultaneously. We propose a modi...ed RDD estimator for such models and derive the conditions under which it is consistent. As an application of our method, we study contracts between a large managed care organization and leading hospitals for the provision of organ and tissue transplants. Exploiting "donut holes" in the reimbursement contracts we estimate how the total claims filed by the hospitals depend on the generosity of the reimbursement structure. Our results show that hospitals submit significantly larger bills when the reimbursement rate is higher, indicating informational asymmetries between the payer and hospitals in this market.

Notes:

Print version record

December 2011.