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LEARNING ABOUT NEW PRODUCTS: AN EMPIRICAL STUDY OF PHYSICIANS' BEHAVIOR
Author(s) -
FERREYRA MARIA MARTA,
KOSENOK GRIGORY
Publication year - 2011
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2010.00310.x
Subject(s) - pessimism , counterfactual conditional , counterfactual thinking , economics , medical prescription , subsidy , quality (philosophy) , contrast (vision) , health care , actuarial science , microeconomics , econometrics , medicine , psychology , computer science , social psychology , economic growth , philosophy , epistemology , artificial intelligence , market economy , pharmacology
We develop and estimate a model of market demand for a new pharmaceutical, whose quality is learned through prescriptions by forward‐looking physicians. We use a panel of antiulcer prescriptions from Italian physicians between 1990 and 1992 and focus on a new molecule available since 1990. We solve the model by calculating physicians' optimal decision rules as functions of their beliefs about the new pharmaceutical. According to our counterfactuals, physicians' initial pessimism and uncertainty can have large, negative effects on their propensity to prescribe the new drug and on expected health outcomes. In contrast, subsidizing the new good can mitigate informational losses. ( JEL I10, L10)