Path dependency in physician decisions

Lawrence Jin, National University of Singapore, Rui Tang, Hong Kong University of Science and Technology, Han Ye, Lingnan University, Junjian Yi, Peking University, and Songfa Zhong, National University of Singapore and New York University Abu Dhabi

We examine path dependency in physician decisions in an emergency department setting, and find that physicians’ treatment decisions for the current and previous patients are positively correlated. We show that the positive autocorrelation is higher when the current patient is of greater medical uncertainty or more similar to the previous patient in terms of observed characteristics and when the physician is less experienced or more fatigued. We then show that these patterns are highly consistent with the memory and attention model (Bordalo, Gennaioli, and Shleifer, 2020), whereby the physician’s current decision is anchored to her previous decision. The results from both reduced-form analyses and structural estimations provide further support for the importance of memory and attention in physician decision-making.