Health Services As Credence Goods: A Field Experiment
53 Pages Posted: 18 Sep 2017 Last revised: 9 Nov 2018
Date Written: September 1, 2018
Agency problems are a defining characteristic of health care markets. We present the results from a field experiment in the market for dental care: A test patient who does not need treatment is sent to 180 dentists to receive treatment recommendations. We vary the level of information and socio-economic status (SES) of the patient and collect measures of market conditions. We observe an overtreatment recommendation rate of 28% and a striking heterogeneity in treatment recommendations. We find significantly less overtreatment recommendations for patients with higher SES compared to lower SES under standard information. This difference diminishes for informed patients suggesting a complex role of patients' SES. Dentists with lower utilization, measured by waiting time for the next possible appointment, are more likely to propose unnecessary treatment.
Keywords: Health Care; Credence Goods; Overtreatment; Market Environment
JEL Classification: C93; D82; I11; L00
Suggested Citation: Suggested Citation