Demand inducement as cheap talk

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Demand inducement as cheap talk

Author Info

Paul Calcott (School of Economics and Finance, Victoria University of Wellington, Wellington, New Zealand)

Abstract

The doctor-patient interaction is analysed in a game of cheap talk. Causes and consequences of imperfect agency are examined. One form of imperfect agency, supplier-induced demand, is a feature of neologism proof equilibria with some parameter values but not with others. The model is used to evaluate two tests that have been used to test for the existence of supplier-induced demand. The analysis suggests that the two tests, which compare the medical utilization of informed and uninformed consumers, are not valid. Copyright © 1999 John Wiley & Sons, Ltd.

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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 8 (1999)
Issue (Month): 8 ()
Pages: 721-733
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Handle: RePEc:wly:hlthec:v:8:y:1999:i:8:p:721-733

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Rochaix, Lise, 1989. "Information asymmetry and search in the market for physicians' services," Journal of Health Economics, Elsevier, vol. 8(1), pages 53-84, March. [Downloadable!] (restricted)
Lee, ChoongSup, 1995. "Optimal medical treatment under asymmetric information," Journal of Health Economics, Elsevier, vol. 14(4), pages 419-441, October. [Downloadable!] (restricted)
Matthews, Steven A. & Okuno-Fujiwara, Masahiro & Postlewaite, Andrew, 1991. "Refining cheap-talk equilibria," Journal of Economic Theory, Elsevier, vol. 55(2), pages 247-273, December. [Downloadable!] (restricted)
Other versions:
- Steven A. Matthews & M. Okuno-Fujiwara & Andrew Postlewaite, 1990. "Refining Cheap-Talk Equilibria," Discussion Papers 892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
Hay, Joel & Leahy, Michael J., 1982. "Physician-induced demand : An empirical analysis of the consumer information gap," Journal of Health Economics, Elsevier, vol. 1(3), pages 231-244, December. [Downloadable!] (restricted)
Grytten, Jostein & Carlsen, Fredrik & Sorensen, Rune, 1995. "Supplier inducement in a public health care system," Journal of Health Economics, Elsevier, vol. 14(2), pages 207-229, June. [Downloadable!] (restricted)
Farrell Joseph, 1993. "Meaning and Credibility in Cheap-Talk Games," Games and Economic Behavior, Elsevier, vol. 5(4), pages 514-531, October. [Downloadable!] (restricted)
Other versions:
- Joseph Farrell., 1986. "Meaning and Credibility in Cheap-Talk Games," Economics Working Papers 8609, University of California at Berkeley.

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Kris De Jaegher & Marc Jegers, 2001. "The physician-patient relationship as a game of strategic information transmission," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 651-668. [Downloadable!]
Einat Neuman & Shoshana Neuman, 2007. "Agency in Health-Care: Are Medical Care-Givers Perfect Agents?," IZA Discussion Papers 2727, Institute for the Study of Labor (IZA). [Downloadable!]
F. Barigozzi & R. Levaggi, 2005. "New Developments in Physician Agency: the Role of Patient Information," Working Papers 550, Dipartimento Scienze Economiche, Università di Bologna. [Downloadable!]

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