IDEAS home Printed from https://ideas.repec.org/a/bla/metroe/v73y2022i1p245-267.html
   My bibliography  Save this article

Information availability and ability choice in a market for physicians

Author

Listed:
  • Edgardo Lara Córdova
  • Javier A. Rodríguez‐Camacho

Abstract

We study the ability choices and pricing strategies of physicians in a duopolistic market where consumers base their decisions on anecdotes. The consumers are aware of only some of the physicians and estimate their abilities by taking a sample from the patients a physician has previously treated. In this setting, situations arise where physicians have incentives to choose a low level of ability even when it is costless. Namely, more information availability leads to more ability differentiation and a lower average level in equilibrium. Conversely, an equilibrium where both physicians choose a maximum ability is possible when information on at least one of the physicians is not readily available.

Suggested Citation

  • Edgardo Lara Córdova & Javier A. Rodríguez‐Camacho, 2022. "Information availability and ability choice in a market for physicians," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 245-267, February.
    • Handle: RePEc:bla:metroe:v:73:y:2022:i:1:p:245-267
    DOI: 10.1111/meca.12361
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/meca.12361
    Download Restriction: no
    File URL: https://libkey.io/10.1111/meca.12361?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Paola Manzini & Marco Mariotti, 2014. "Stochastic Choice and Consideration Sets," Econometrica, Econometric Society, vol. 82(3), pages 1153-1176, May.
    2. Ireland, Norman J, 1993. "The Provision of Information in a Bertrand Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 41(1), pages 61-76, March.
    3. Ran Spiegler, 2006. "The Market for Quacks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(4), pages 1113-1131.
    4. , & ,, 2011. "On the strategic use of attention grabbers," Theoretical Economics, Econometric Society, vol. 6(1), January.
    5. Sunstein, Cass R, 2003. "Terrorism and Probability Neglect," Journal of Risk and Uncertainty, Springer, vol. 26(2-3), pages 121-136, March-May.
    6. Matthew Rabin, 2002. "Inference by Believers in the Law of Small Numbers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 775-816.
    7. Angela Fagerlin & Catharine Wang & Peter A. Ubel, 2005. "Reducing the Influence of Anecdotal Reasoning on People’s Health Care Decisions: Is a Picture Worth a Thousand Statistics?," Medical Decision Making, , vol. 25(4), pages 398-405, July.
    8. Feldstein, Martin S, 1970. "The Rising Price of Physicians' Services," The Review of Economics and Statistics, MIT Press, vol. 52(2), pages 121-133, May.
    9. Isaac M. Lipkus & Greg Samsa & Barbara K. Rimer, 2001. "General Performance on a Numeracy Scale among Highly Educated Samples," Medical Decision Making, , vol. 21(1), pages 37-44, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Szech, Nora, 2011. "Becoming a bad doctor," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 244-257.
    2. Mark Armstrong & John Vickers, 2022. "Patterns of Competitive Interaction," Econometrica, Econometric Society, vol. 90(1), pages 153-191, January.
    3. Mark Armstrong & John Vickers, 2018. "Patterns of Competition with Captive Customers," Economics Series Working Papers 864, University of Oxford, Department of Economics.
    4. Michael Grubb, 2015. "Failing to Choose the Best Price: Theory, Evidence, and Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 303-340, November.
    5. Armstrong, Mark & Vickers, John, 2020. "Patterns of Price Competition and the Structure of Consumer Choice," MPRA Paper 98346, University Library of Munich, Germany.
    6. Axel Stahmer, 2015. "Fund flows inducing mispricing of risk in competitive financial markets," ESMT Research Working Papers ESMT-15-04, ESMT European School of Management and Technology.
    7. ,, 2006. "Competition over agents with boundedly rational expectations," Theoretical Economics, Econometric Society, vol. 1(2), pages 207-231, June.
    8. Paola Manzini & Marco Mariotti, 2018. "Competing for Attention: Is the Showiest Also the Best?," Economic Journal, Royal Economic Society, vol. 128(609), pages 827-844, March.
    9. Levon Barseghyan & Francesca Molinari & Matthew Thirkettle, 2021. "Discrete Choice under Risk with Limited Consideration," American Economic Review, American Economic Association, vol. 111(6), pages 1972-2006, June.
    10. Bianchi, Milo & Jehiel, Philippe, 2020. "Bundlers' dilemmas in financial markets with sampling investors," Theoretical Economics, Econometric Society, vol. 15(2), May.
    11. Karpov, Aleksandr, 2017. "Price competition and limited attention," Economics Discussion Papers 2017-89, Kiel Institute for the World Economy (IfW Kiel).
    12. Johannes Johnen & David Ronayne, 2021. "The only Dance in Town: Unique Equilibrium in a Generalized Model of Price Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 595-614, September.
    13. Paola Manzini & Marco Mariotti, 2015. "Modelling Imperfect Attention," Working Papers 744, Queen Mary University of London, School of Economics and Finance.
    14. Schmitt, Stefanie Yvonne, 2016. "Rational allocation of attention in decision-making," BERG Working Paper Series 114, Bamberg University, Bamberg Economic Research Group.
    15. Ronayne, David & Brown, Gordon D.A., 2016. "Multi-attribute decision by sampling: An account of the attraction, comprimise and similarity effects," The Warwick Economics Research Paper Series (TWERPS) 1124, University of Warwick, Department of Economics.
    16. Francisco Silva & Samir Mamadehussene, 2020. "The Equivalence Between Sequential and Simultaneous Firm Decisions," Documentos de Trabajo 541, Instituto de Economia. Pontificia Universidad Católica de Chile..
    17. Christina Kreuzmair & Michael Siegrist & Carmen Keller, 2017. "Does Iconicity in Pictographs Matter? The Influence of Iconicity and Numeracy on Information Processing, Decision Making, and Liking in an Eye‐Tracking Study," Risk Analysis, John Wiley & Sons, vol. 37(3), pages 546-556, March.
    18. Milo Bianchi & Philippe Jehiel, 2019. "Bundling, Belief Dispersion, and Mispricing in Financial Markets," Working Papers halshs-02183306, HAL.
    19. Garcia-Retamero, Rocio & Hoffrage, Ulrich, 2013. "Visual representation of statistical information improves diagnostic inferences in doctors and their patients," Social Science & Medicine, Elsevier, vol. 83(C), pages 27-33.
    20. Marie-Anne Durand & Renata W Yen & James O’Malley & Glyn Elwyn & Julien Mancini, 2020. "Graph literacy matters: Examining the association between graph literacy, health literacy, and numeracy in a Medicaid eligible population," PLOS ONE, Public Library of Science, vol. 15(11), pages 1-14, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:metroe:v:73:y:2022:i:1:p:245-267. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0026-1386 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.