The Market for Quacks
研究一群庸医在价格竞争中的行为，患者因有限理性而依赖传闻推理，导致市场活跃且福利损失非单调变化；即使干预市场，只要患者推理水平不提升，普通竞争政策可能无效。
A group of n "quacks" plays a price-competition game, facing a continuum of "patients" who recover with probability α, whether they acquire a quack's "treatment". If patients chose rationally, the market would be inactive. I assume, however, that patients choose according to a boundedly rational procedure, which reflects "anecdotal" reasoning. This element of bounded rationality has significant implications. The market for quacks is active, and patients suffer a welfare loss which behaves non-monotonically w.r.t. n and α. In an extended model that endogenizes the quacks' choice of "treatments", the quacks minimize the force of price competition by offering maximally differentiated treatments. The patients' welfare loss is robust to market interventions, which would crowd out low-quality firms in standard models. Thus, as long as the patients' quality of reasoning is not lifted above the anecdotal level, ordinary competition policies may be ineffective. Copyright 2006, Wiley-Blackwell.