Opposite Day at the COI Blog

Okay, I’m a bit late – since Opposite Day is traditionally celebrated on August 20 (or, by another reckoning, January 25 – in which case I’m very late, or very early).  But given my attraction to opposites – which extends to my wife, who reads only fiction, whereas I read only its opposite  – I can’t pass up another chance to write about opposites here.

In the past, I’ve suggested that one way of looking at the opposite of a COI is not the absence of a conflict but a situation where agents to identify too much – rather than too little – with the interests of their respective principals.  (This is to be distinguished from a “reverse conflict of interest” where a conflict is permitted to exist but those impacted overreact to it. )  And in another post, I suggest looking at “conflict of interest world” – meaning what life would be like in a world without legal and ethical limitations on COIs – as a way of increasing appreciation for such restraints.

“Moral hazard” is certainly not an opposite of conflict of interest.  I see the two more like “cousins,” in that they both entail interests that can detract from optimal decision making (as discussed in some of the posts collected here).    But I hadn’t thought of what the opposite of moral hazard might be until I read this recent piece in the NYTimes  by Sendhil  Mullainathan (an economics professor at Harvard ) arguing that while co-pays can be an important means to reduce wasteful health care choices, in some situations research shows that they unduly discourage patients from taking medicine that – purely as a matter of economic logic – the patients should take.  As he notes:  “The problem here is the exact opposite of moral hazard.”

My interest is moral hazard is largely limited to how it can inform the design and operation of compliance programs, and there too it seems worthwhile to consider opposites.  The specifics of these I hope to explore at a later time, but in its most basic form such an opposite might be a compliance program that instead of doing too little to prevent wrongdoing  creates incentives to do too much along these lines, as described in this post from the CCI website on “Goldilocks compliance” (a reference which I hope will convince my wife that I’m not completely ignorant of the world of literature).