Information and sorting in the market for obstetrical services
Using a statistical model and a partial equilibrium economic search model, we develop a methodology for appraising the value of consumer information about the quality of health care providers and apply it to information about physicians' predispositions to perform cesarean section deliveries. There are three primary results. First, information's value is roughly proportional to a simple statistical metric of its accuracy; the constant of proportionality can be imputed from knowledge of consumer search methods and consumer preferences. Second, the function governing the production of information from data 'inputs' can have surprising economic properties, such as economies of scale, that usefully inform the efficient production of consumer information. These properties are robust even when the value of information cannot be precisely determined. Third, information's value is enhanced by the way physicians are sorted into hospitals but greatly attenuated by the presence of other dimensions of physician heterogeneity. Under plausible assumptions, the value of information in our empirical application is small enough that it is not surprising that consumers do not utilize it when selecting a physician. Copyright © 2005 John Wiley & Sons, Ltd.
Volume (Year): 14 (2005)
Issue (Month): 7 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749|
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.:
- Schwartz, Alan & Wilde, Louis L, 1982. "Imperfect Information, Monopolistic Competition, and Public Policy," American Economic Review, American Economic Association, vol. 72(2), pages 18-23, May.
- Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-91, September.
- Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
- David Dranove & Mark A. Satterthwaite, 1992. "Monopolistic Competition When Price and Quality are Imperfectly Observable," RAND Journal of Economics, The RAND Corporation, vol. 23(4), pages 518-534, Winter.
- Dubay, Lisa & Kaestner, Robert & Waidmann, Timothy, 1999. "The impact of malpractice fears on cesarean section rates," Journal of Health Economics, Elsevier, vol. 18(4), pages 491-522, August.
- Dale Tussing, A. & Wojtowycz, Martha A., 1993. "The effect of physician characteristics on clinical behavior: Cesarean section in New York State," Social Science & Medicine, Elsevier, vol. 37(10), pages 1251-1260, November.
- Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
- Burgess Jr., James F. & Christiansen, Cindy L. & Michalak, Sarah E. & Morris, Carl N., 2000. "Medical profiling: improving standards and risk adjustments using hierarchical models," Journal of Health Economics, Elsevier, vol. 19(3), pages 291-309, May.
- John Godard & John T. Delaney, 2000. "Reflections on the ôhigh performanceö paradigmÆs implications for industrial relations as a field," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 482-502, April.
- 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.
- Stiglitz, Joseph E., 1989. "Imperfect information in the product market," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 13, pages 769-847 Elsevier.
- Martin Gaynor & Solomon Polachek, 1990. "Measuring Ignorance in the Market: A New Method with an Application to Physician Services," NBER Working Papers 3430, National Bureau of Economic Research, Inc.
- Wolinsky, Asher, 1983. "Prices as Signals of Product Quality," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 647-58, October.
When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:14:y:2005:i:7:p:703-719. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.