Demand inducement as cheap talk
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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Volume (Year): 8 (1999)
Issue (Month): 8 ()
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"Refining Cheap-Talk Equilibria,"
892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Games and Economic Behavior,
Elsevier, vol. 5(4), pages 514-531, October.
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- J. Farrell, 2010. "Meaning and Credibility in Cheap Talk Games," Levine's Working Paper Archive 533, David K. Levine.
- Joseph Farrell., 1986. "Meaning and Credibility in Cheap-Talk Games," Economics Working Papers 8609, University of California at Berkeley.
- 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.
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