Basics of Information Disclosure
A defining feature of healthcare markets is that key dimensions of quality, prices, and performance are often difficult for patients, providers, and payers to observe. These information frictions motivate a wide range of disclosure policies, including public reporting of provider quality, insurance plan ratings, and posted prices. Understanding how disclosure affects behavior requires careful attention to who receives the information, what exactly is disclosed, and how agents incorporate that information into their decisions.
The literature on information disclosure studies how increased observability changes market outcomes through several channels. On the demand side, disclosure can shift patient or enrollee choice by reducing uncertainty or correcting misperceptions. On the supply side, disclosure can alter provider incentives through reputation, referral patterns, and competitive pressure. At the same time, disclosure may induce strategic responses that complicate both empirical measurement and welfare analysis.
We introduce this literature by focusing on core economic mechanisms and general lessons that apply across institutional settings. This framework provides the foundation for the next classes on physician quality reporting, insurance ratings, and price transparency. Potential papers for presentation today include:
- Dranove and Jin (2010) — a canonical survey of theory and evidence on quality disclosure and certification
- Luco (2019) — modern evidence on equilibrium and distributional effects of price disclosure