Regulation of Organ Transplantation and Procurement (Chen and Roth in the JPE)

 Here's a new paper (in final form, online ahead of print) on how organ transplants are regulated.  The paper uses an experiment to make several points about the design of current regulations.  One of them is that transplant centers are incentivized to be risk averse, since they are measured only by the outcomes of the transplants they perform, and not on the outcomes for patients they decline to transplant (so they are reluctant to transplant risky kidneys or risky patients).

Regulation of Organ Transplantation and Procurement: A Market-Design Lab Experiment by Alex Chan and Alvin E. Roth, Journal of Political Economy, online ahead-of-print .

 Abstract: We conduct a lab experiment that shows that current rules regulating transplant centers (TCs) and organ-procurement organizations (OPOs) create perverse incentives that inefficiently reduce both organ recovery and beneficial transplantations. We model the decision environment with a two-player multiround game between an OPO and a TC. In the condition that simulates current rules, OPOs recover only the highest-quality kidneys and forgo valuable recovery opportunities, and TCs decline some beneficial transplants. Alternative regulations that reward TCs and OPOs together for health outcomes in their entire patient pool lead to behaviors that increase organ recovery and appropriate transplants.

Here's what transplants look like in our experimental environment:

And our results are robust to big changes in parameters: