Institutional Solutions to the Asymmetric Information Problem in Health and Development Services for the Poor

Abstract

The world’s poorest pay for professional services and thus are in a “market,” whether the services are provided in the public or private sectors. The associated problems of unequal information are particularly acute in undergoverned countries, where state regulation is weak. We systematically review the evidence on solutions to these problems in a variety of professions. Payments by clients are more likely to have a positive effect on quality if they are made through locally-managed organizations rather than directly to individual practitioners, particularly if those organizations have an institutionalized history of other—regarding values and incorporate client participation.