Induction demand phenomena has usually been considered like a doctor?s moral hazard behaviours. The first result of this paper is to reveal that these phenomena is a simple adverse selection problem. Thanks to the fact that health state is an argument of the doctor?s utility, we build a...

According to insurance theory, agents who have insurance coverage have less incentives to make preventive actions. In the case of complete coverage, this behavior, called ex ante moral hazard, is so strong that policy holders make no preventive action. Shavell [1979] shows that the optimal...