BFI Student Lunch Series – Predictably Unpredictable Inspections

BFI’s Student Lunch Series invites prominent speakers to engage undergraduate and graduate students in discussions on economics. The talks highlight the practical use of economics for answering real-world questions pertinent to businesses and policy makers.

Lunch will be provided.

If you have any questions please reach out to bfi-events@uchicago.edu.

Inspections are a common tool for acquiring information and incentivizing compliance. Though typically unannounced, they often follow a predictable schedule. Maggie Shi shows how this predictability shapes firm effort and patient outcomes in U.S. nursing homes. Nursing homes “slack” in the low-risk period following an inspection and ramp up effort as their next inspection approaches. Patient survival mirrors this pattern, suggesting meaningful consequences for care quality. These estimates are embedded into a dynamic model, capturing how inspection regimes incentivize effort and reveal quality. Unpredictability induces as much additional effort as increasing inspection frequency by 10%, with minimal loss of informational value.

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