Information issues on the medicine market: evidence from Costa Rica

Abstract

In market transactions, usually, there is a side that has more information, this gives rise to potential conflicts between parties and their interests. The discipline of information economics was born to analyze and understand these phenomena. A sector where this is notoriously appreciated is health, doctors have in-depth knowledge of the area, while patients do not. This sector is a paramount aspect of the quality of life, and with high potential risks, therefore, many patients have no choice but to trust medical prescriptions. Due to this, this research is carried out, with the objective to investigate the possible information issues in the medicine markets, from the doctor-patient relationships. Methodologically, to accomplish this, a case study is proposed, where we worked with seven patients and four doctors in Costa Rica. Finding that there are information problems in agent-principal relationships in this market. Patients are not aware of possible substitutes or price differences between them, and doctors do not usually inform them of treatment alternatives, limiting their decision-making frames, leading to economically inefficient choices. Many of these problems are caused by the high costs of information and knowledge acquisition.