Abstract for: Beyond Personality Traits and Financial Incentives: Bias and Variation in Medical Practices as Results of Experiential Learning

Physicians are far from optimal decision makers: they overuse defensive medical practices such as medical tests (bias), and they disagree on their diagnoses and treatments (practice variation). Besides the regional factors (such as culture), at the individual level, the most common explanations for these phenomena are linked to physicians’ personality traits (e.g., risk aversion) or their financial incentives. We develop a theory that offers a new explanation. With the help of a simulation model, we show that practice variation and bias does not have to be caused by personality traits and financial incentives, but can endogenously emerge through daily practices and outcome learning even for physicians with similar trainings working in the same region. Specifically, a physician’s exposure to outcome feedback and her accumulated experience and skill contribute to variation and bias. A preliminary validation is achieved by comparing simulation results with the data from c-section surgery in the states of New York and Florida.