By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.
Transplant center oversight—conducted through costly flagging
based on survival rates—is intended to improve outcomes. However,
it has faced challenges because centers strategically select patients
(and organs) to improve their reported outcomes. We study the
optimal flagging policy using a mechanism-design model in which
heterogeneous centers can improve their survival rates by investing,
selecting patients, or both. We find that (a) the optimal mechanism
never flags intrinsically good-enough center types, and (b) under
the optimal mechanism, intrinsically worse centers select patients,
while intrinsically better centers underinvest. These results apply
to the regulation of charter schools and development banks.
