Information disclosure and peer effects in the use of antibiotics

Mandatory information disclosure may allow sellers to observe and respond to other sellers’ attributes (seller peer effects) as well as informing consumers of the sellers’ attributes (consumer learning effect). Using the data from mandatory information disclosure of antibiotic prescription rates for the common cold in Korea, this paper shows that while average prescription rates decreased after the disclosure, more than 30% of the clinics increased their antibiotic prescriptions. Moreover, clinics that were prescribing relatively fewer antibiotics than other local clinics before the disclosure requirement were more likely to increase their prescription rate. The average prescription rates also declined less in markets with stronger clinic competition. These results are consistent with seller peer effects.