We show that the intuition underlying the supplier-induced demand (SID) hypothesis is reflected in the cheap-talk literature from game theory, and in the credence-good literature from the economics of information. Applying these theories, we conclude that a neoclassical version of the SID...

Horn's rule says that messages can be kept ambiguous if only a single interpretation is plausible. Speakers only perform costly disambiguation to convey surprising information. This paper shows that, while non-cooperative game theory cannot justify Horn's rule, evolutionary game theory can. In...

This paper develops a model of supplier-induced demand as strategic framing where the patient has reference-dependent references, and the physician can persuade the patient to buy a treatment by affecting the patient.s reference point. In the main result, the patient is assumed to have a...