TITLE: Analysis and Remedy of the Donor-Priority Rule

ABSTRACT:

The ongoing shortage of organs for transplantation has inspired a vibrant literature on organ allocation. By contrast, organ donation has been little explored. In this paper, we develop a parsimonious model of organ donation to analyze the social-welfare consequences of introducing the donor-priority rule, which grants registered organ donors priority in receiving organs, should they need transplants in the future. We model an individual’s decision to join the donor registry, which entails a trade-off between abundance of supply, exclusivity of priority, and cost of donating (e.g., psychological burden). By incorporating heterogeneity in the probability of requiring an organ transplant and in organ quality, we show that, in contrast to the literature, introducing the donor-priority rule can lower social welfare due to unbalanced incentives across different types of individuals. In view of the potentially undesirable social-welfare consequences, we propose a freeze-period remedy, under which an individual is not entitled to a higher queueing priority until after having been on the organ-donor registry for a specified period. We show that, echoing the theory of the second best (Lipsey and Lancaster 1956), this additional market friction helps rebalance the incentive structure, and in conjunction with the donor-priority rule, can guarantee an increase in social welfare by boosting organ supply without compromising organ quality or inducing excessively high costs of donating.

BIO: Tinglong Dai is an assistant professor at the Johns Hopkins University, Carey Business School. His research areas include healthcare operations, and marketing/operations interfaces. He received his PhD (2013) and MS (2009) in Operations Management/Robotics from Tepper School of Business, Carnegie Mellon University. He also received an MPhil (2006) in Industrial Engineering and Engineering Management from the Hong Kong University of Science and Technology.

Dai’s research has been published in leading journals such as Management Science, Operations Research, Manufacturing & Service Operations Management, and INFORMS Journal on Computing. He is on the Editorial Review Board of Production and Operations Management. He is the founder of the Johns Hopkins Symposium on Healthcare Operations, and co-edits the Handbook of Healthcare Analytics: Theoretical Minimum for Conducting 21st Century Research on Healthcare Operations, to be published by John Wiley & Sons in 2018.

Dai is the recipient of the inaugural Johns Hopkins Discovery Award (2015), Dean’s Award for Faculty Excellence (2016, 2017), M&SOM Meritorious Service Award (2016), the First Place of POMS Best Healthcare Paper Award (2012), INFORMS Pierskalla Runner-up Award for the Best Paper in Healthcare (2012), and the Second Place of POMS Best Healthcare Paper Award (2016). He is a finalist for the Elwood S. Buffa Doctoral Dissertation Award (2014) and the POMS College of Supply Chain Management Best Student Paper Award (2013). He has been quoted in Washington Post, Baltimore Sun, MedPage Today, and Pharmacy Times, among others.