Supply: Physicians (L5)

Question 1

principal-agent relationship

Answer 1

patients (principals) hire physicians to serve as their agents. Patients trust physicians to act as perfect agents for their health, but out of self-interest physicians may violate their roles as agents

Question 2

credence good

Answer 2

goods and services where an expert knows more about the quality a consumer needs than the consumer

Question 3

physician-induced demand

Answer 3

Due to information asymmetry between doctor and patient, patients cannot assess whether an extra test or procedure ordered by doctor is necessary. There is a financial incentive for doctors to prescribe more services than needed.

Question 4

Defensive medicine

Answer 4

Overutilization (and overcharge) for marginally-useful procedures to protect against malpractice lawsuits

Question 5

taste-based discrimination

Answer 5

preferential treatment for certain groups of patients (conscious or unconscious)
Always inefficient

Question 6

statistical discrimination

Answer 6

stereotypes based on biology or behavioral tendencies

Some argue may be efficient sometimes

Question 7

standardized patients

Answer 7

actors that pretend to be patients to test what doctors recommend - doctors do not know they are being tested

Question 8

Components of quality (for doctors)

Answer 8

1. competence/knowledge/education - doctors know how to correctly diagnose and treat patients
2. low or misdirected effort - doctors know how to correctly diagnose and treat patients, but face weak or misaligned incentives

Question 9

Clinical vignettes

Answer 9

doctors are presented case and evaluated on response - they know they are being tested

Question 10

“Know-do gap”

Answer 10

What doctors know to do (vignettes) - what they do in practice (SP)

Question 11

“Zero-markup” Policy

Answer 11

addresses over-treatment due to providers reliance on drugs, which they prescribe and sell