Learning and Reputation with Asymmetric Information as Seen in Rural African Health Care

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This project investigates the role of patient information concerning multipleaspects of quality in the health sector of Tanzania, and how this informationchanges and is updated when quality changes. In Tanzania, as in most African countries, patients, even the poor, have anumber of choices when they seek care. Although it may involve significantadditional expense, patients frequently bypass one facility to seek care at amore distant facility. Differences in quality can explain this phenomenon.However, it is widely held that patients cannot directly evaluate many aspectsof quality in health care. Patients know that one facility is cleaner or has amore polite staff, but they do not know the quality of their consultation orprescription. They seek the services of a professional because they do not knowwhat professionals know, and this leaves them unable to fully evaluate theservices they receive.This project collects a unique data set in which patient choices are matchedwith objective measures of a variety of aspects of quality as evaluated byother physicians. Though patients cannot directly evaluate all aspects ofquality, another doctor can. The data depicts patients' willingness to incuradditional travel cost for different objective aspects of quality. Preliminary analysis of an earlier round of data collection has shown thatpatients know about unobservable aspects of quality. The additional round ofdata quantitatively characterizes the method by which patients learn aboutsomething that they cannot directly observe. The data depicts quality thatvaries between facilities, between the various organizations that providehealth services in Tanzania, within these organizations and over time. Usingthis data, the project reveals whether patients assign reputations toorganizations, management practices within organizations, individualfacilities, or even individual doctors. It addition, it depicts the speed withwhich patients update their information about quality. The manner and speed with which patients learn and update informationabout quality has important implications for the future of decentralization,privatization and regulation of health services in Tanzania and Africa ingeneral.