W. Bentley MacLeod Publications

Doctors often treat similar patients differently, which affects health outcomes and medical spending. We assess the recent literature on doctor decision-making through the lens of a model that incorporates diagnostic and procedural skills, beliefs, incentives, and differences in patient pools. Decision-making is affected by beliefs, training, experience, peer effects, financial incentives, and time constraints. Interventions to improve decision-making include providing information, guidelines, and technologies like electronic medical records and algorithmic decision tools. Economists have made progress in understanding doctor decision-making, but applications of that knowledge to improving health care are still limited.

This paper outlines an economic model that provides a framework for organising the growing literature on the performance of physicians and judges. The primary task of these professionals is to make decisions based on the information provided by their clients. The paper discusses professional decisions in terms of what Kahneman (2011) calls fast and slow decisions, known as System 1 and System 2 in cognitive science. Slow decisions correspond to the economist’s model of rational choice, while System 1 (fast) decisions are high‑speed, intuitive choices guided by training and human capital. This distinction is used to provide a model of decision‑making under uncertainty based on Bewley (2011)’s theory of Knightian uncertainty to show that human values are an essential input to optimal choice. This, in turn, provides conditions under which artificial intelligence (AI) tools can assist professional decision‑making, while pointing to cases where such tools need to explicitly incorporate human values in order to make better decisions.

Collective bargaining agreements (CBAs) specify the contractual rights of unionized workers, but their full legal content has not yet been analyzed by economists. This paper develops novel natural language methods to analyze the empirical determinants and economic value of these rights using a new collection of 30,000 CBAs from Canada in the period 1986-2015. We parse legally binding rights (e.g., “workers shall receive. . . ”) and obligations (e.g., “the employer shall provide. . . ”) from contract text, and validate our measures through evaluation of clause pairs and comparison to firm surveys on HR practices. Using timevarying province-level variation in labor income tax rates, we find that higher taxes increase the share of worker-rights clauses while reducing pre-tax wages in unionized firms, consistent with a substitution effect away from taxed wages toward untaxed rights. Further, an exogenous increase in the value of outside options (from a leave-one-out instrument for labor demand) increases the share of worker rights clauses in CBAs. Combining the regression estimates, we infer that a one-standard-deviation increase in worker rights is valued at about 5.7% of wages.

Doctors often treat similar patients differently, which affects health outcomes and medical spending. We assess the recent literature on doctor decision making through the lens of a model that incorporates diagnostic and procedural skills, beliefs, incentives, and differences in patient pools. Decision making is affected by beliefs, training, experience, peer effects, financial incentives, and time constraints. Interventions to improve decision making include providing information, guidelines, and technologies like electronic medical records and algorithmic decision tools. Economists have made progress in understanding doctor decision making, but applications of that knowledge to improving health care are still limited.