This seminar will take place in the Shanghai room (1.24) at the Tinbergen Institute Amsterdam.

Can Managed Competition Work? The US Medicare Advantage Program.
Liran Einav (Stanford University, United States)

We study health plan costs, risk selection and pricing incentives under the competitive mechanism introduced into Medicare Advantage in 2006. We present a model of plan bidding and consumer choice that allows for market power and risk selection. Using data on the universe of Medicare beneficiaries, we find that private plan costs are lower on average and only weakly correlated with fee-for-service Medicare costs. Private plans attract relatively healthy enrollees, but bidding higher does not result in more favorable risk selection. Nevertheless, plan incentives to bid low are relatively weak because enrollee demand is not very price-sensitive. We attribute this more to consumer decision-making than concentrated market structure. We use our model and empirical estimates to examine program changes that might enhance competition. Joint with with Vilsa Curto, Jonathan Levin, and Jay Bhattacharyay.

An Empirical Assessment of School Assignment Mechanism
Bas van der Klaauw (VU University Amsterdam)

This paper assesses the performance of different school assignment mechanisms in the context of secondary education in Amsterdam. To do so, we complemented the current Boston-type mechanism with a survey that elicits students’ ordinal and cardinal preferences. We find evidence that a substantial number of students behave strategically under the current system. Simulations show that Random Serial Dictatorship (RSD) dominates the current system in terms of the number of students being placed in more preferred schools. Deferred Acceptance places fewer students in their most preferred school than the current system or RSD, but more students in their top 3. This comes, however, at the cost of substantial (Pareto) inefficiency.