EcmC34 Lecture 10.doc

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17 Apr 2012
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ECMC34 Lec 7
Talking about imperfect information
Physician knows more about math problems than you as a patient
more common way physicians are paid = fee for service
for each service provided, you get a fee
Supplier Induced Demand
-occurs when physicians in a fee for service pay system, prescribe unnecessary service
their income
-usually occurs only in a fee for service pay system
Small Area Variation
-imperfect info regarding how to treat something
-variation in treatment regarding how to treat something
-variation in treatment patterns arise because of differences among physicians in terms
of the best way to treat them
-e.g. child birth -> c section vs regular child birth; could be due to small differences in
terms of what physician believes may be right
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