How to handle conflict of interest between labs vs patients

A friend forwarded the below message on Whatsapp and asked

“Now what?”

The forward was a snapshot from a Facebook post and it read thus

I own a testing lab

Today I received 10 samples for testing in my lab. All were negative. If I declare all negative, then these 10 samples will not give me income tomorrow. Thinking about this, I declared 4 out of these as positive

Next day, the 4 people’s relatives/friends (who were in contact with them) had come for testing. I got 40 samples. I was overjoyed

Again out of 40 samples, I declared 12 samples as positive, next day I received 120 samples of friends/relatives

Now tell me, can you stop me from being rich? So how do you like this business game? Did you understand anything from this?

Here is a clear cut case of conflict of interest. I do not know the authenticity of the claim, however the issue that there exists a conflict of interest is clear

Conflict of interest is a situation in which a person is involved in multiple competing interests and serving one interest could involve working against the other

The above message got me thinking on how can we prevent such conflicts of interest during policy making & policy implementation?

Principal-Agent problem

In policy making this is called as principal-agent problem. Here a person i.e. agent, is able to make a decision on behalf of another person i.e. the principal. The dilemma exists when the agent is motivated to take an action which is in his/her best interest but is contrary to the principal’s best interest

In our covid lab testing problem, the principal is the patient who is giving his/her sample for testing and the agent is the lab owner. The lab owner in this case is motivated to give an incorrect result to maximise profits which is detrimental to the principal’s interests

Now that we have a clearly defined model, what are the suggestions to prevent untoward behaviours?

Financial Incentives

One suggested method for such problems is to provide a financial incentive to encourage the agent to work in the principal’s interest

In the lab testing problem, how do we provide financial incentive to drive appropriate behaviour?

Do we pay more for negative results compared to positive ones? That again doesn’t make sense because every positive result is going to increase the inflow for more testing and this policy is not going to clip this reinforcing loop

Rather can we change the way payments are done i.e. rather than each patient paying for a test, can we provide a flat amount to the covid labs irrespective of the number of tests that are done? Of course we should have some guardrails like having to do a minimum number of tests a month to qualify for this

The payments could go through the insurance companies or government to a set of covid certified labs across the country

Auditing results

The second option is to audit the results. This could be random sampling, where we pick 1 out of every 1000 and run it through another lab

Specific to covid, the tests by itself is not conclusive, so we would need to have a higher tolerance to error rate. This could control intentional false positives to an extent

Fine, are there any other aspects that we can consider?

Behavioural Economics

Dan Ariely in his book Predictably Irrational discusses his research findings on the hidden forces that shape our decisions

Some of his findings hinges on the ethical behaviours which would be relevant for our problem on conflict of interest

Personal fudge factor

In an experiment, he gave two separate groups 20 simple maths problem to be solved within 5 minutes. Post 5 minutes, he asked the people from the first group to tell him how many problems they solved and he handed over a dollar per answer. On an average people in this group claimed that they answered four questions for which they were given four dollars

In the other group, he asked people to shred the answer paper and then tell him how many they solved. On an average members in this group claimed that they solved seven questions and they earned seven dollars

What was surprising about the experiment was that, although the second group knew they could lie through their teeth, as the paper was shredded, it was observed that people did not cheat a lot

Each of them seemed to have an inner threshold, called the fudge factor, beyond which they were not be able to self justify their self image of being honest and this controlled the level of cheating!

So coming to our lab testing problem, can we control the fudge factor?

How do we shrink the fudge factor?

Dan Ariely continued his experiments to find out on how we can shrink the fudge factor

He did experiments where people had to recall the 10 commandments or swear by their holy book or read out a honour code. When any of these were initiated, he observed that the cheating stopped

So the closest solution to invoke the labs self righteousness is to regularly invoke their code of honour and hope that will lower the level of cheating at least among some members

Now is there something that will increase the fudge factor thereby derailing our exercise?

Increasing the fudge factor

To test this, Dan Ariely had done another experiment. In this setup, people solved the questions, walked up and asked for the same number of tokens that they claimed to have solved and then they walked into the next room and exchanged the tokens for dollars. Here the cheating doubled

So the cheating increased, the further a person was away from an actual exchange of money. This is akin to how we see where taking a pen worth Rs. 10/- from our office is ok but taking Rs.10/- from the office cash register is considered stealing

So by this logic, how do we reduce the degree of separation between the patient, the payment and the lab i.e. invoke morality for the lab owner by giving a face to the patient rather than an automated e-mail triggering the report to an unknown receiver? That’s probably an experiment worth doing

Social context to cheating

Is there a relation between social norms and cheating?

In this experiment, Dan Ariely had implanted an actor among the students from two different colleges. When the students were solving, the actor wearing the jersey of one of the college stood up in a matter of few minutes and claimed that he had completed the test, where-in it was obvious to everyone that he was cheating

It was observed that the cheating went up considerably from those students who were from the same college. The actor seem to have set the norms of cheating and the students from the same group felt that it is ok to cheat

The takeaway from this research would be that, we could reduce the tendency of labs cheating by building mechanisms where the positive messages are reinforced. This could be through dissemination of positive news, recognising labs with high standards, recognising those which has shown high levels of social responsibility, etc

We have no way to ascertain the authenticity of the forward that I received, however it brings to light the possible conflicts of interest that we face on a daily basis

The points that I have illustrated here are just to trigger your creative thinking on conflict of interest. If you are someone who studies conflicts of interest or know of better way of handling this, do not hesitate to comment and share your ideas. I would be genuinely intrigued on how else we could handle the mentioned issue

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