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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- 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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"Meaning and Credibility in Cheap-Talk Games,"
Department of Economics, Working Paper Series
qt4968n3fz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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- Steven A. Matthews & M. Okuno-Fujiwara & Andrew Postlewaite, 1990.
"Refining Cheap-Talk Equilibria,"
892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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- Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
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