Asymmetry of Information

The usual asymmetry relates to the difference in the information known to a patient, or member of the public, and that known to a professional such as a doctor or nurse. While it is sometimes thought that the informational advantage is all on one side (the professional's), this is to take too narrow a view of what the information may be about. For example, while it may be realistic to imagine that a doctor will have more knowledge about the probable consequences of a particular clinical intervention on a person's health, the doctor will usually have less competence in assessing the consequences for that person's home and working life; here the advantage lies with the patient, who will also usually be more competent in judging the value (utility) of alternative clinical possibilities that the professional may propose (including 'doing nothing'). It would seem to follow that decisions intended to be of real benefit to a patient ought to be taken in a mutual fashion, with professional and patient in effect pooling their respective sets of information and the patient then either reaching the final decision or delegating it to the professional. See Agency Relationship.

Another important form of asymmetry that is important in health economics is the difference in information available to an insurer and an insured person. The insurer will typically set premia according to broad averages of probability and expense to cover the expected liability while the insured person may possess information, for example about private lifestyle and the risks to health that it entails, which is not available to the former and that indicates that the probability is higher or lower than the one embodied in the premium calculation. If higher, the incentive to buy insurance is, ceteris paribus, greater and the risk of financial loss to the insurer is also greater. If lower, it becomes less likely that insurance will be purchased. The use of experience rating and no-claims 'bonuses' are two ways used by insurers to overcome this difficulty. See Adverse Selection.

20 Asymptote Asymptote

A straight line that is the limiting value of a curve. The asymptote of a curve can be thought of as a line that is continuously approached but never touched by the curve.

Was this article helpful?

0 0

Post a comment