Incentivized Kidney Exchange
Tayfun Sönmez, M. Utku Ünver, M. Bumin Yenmez
Abstract
Over the last 15 years, kidney exchange has become a mainstream paradigm to increase transplants. However, compatible pairs do not participate, and full benefits from exchange can be realized only if they do. We propose incentivizing compatible pairs to participate in exchange by insuring their patients against future renal failure via increased priority in deceased-donor queue. We analyze equity and welfare benefits of this scheme through a new dynamic continuum model. We calibrate the model with US data and quantify substantial gains from adopting incentivized exchange, both in terms of access to living-donor transplants and reduced competition for deceased-donor transplants. (JEL D47, I11, I12, I18)