Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2017:7: Information, Switching Costs, and Consumer Choice: Evidence from Two Randomized Field Experiments in Swedish Primary Health Care

Anders Anell (), Jens Dietrichson (), Lina Maria Ellegård () and Gustav Kjellsson ()
Additional contact information
Anders Anell: Department of Business Administration, Lund University
Jens Dietrichson: The Danish National Centre for Social Research (SFI)
Lina Maria Ellegård: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Gustav Kjellsson: Department of Economics, University of Gothenburg

Abstract: Consumers of services that are financed by a third party, such as publicly financed health care or firm-sponsored health plans, are often allowed to freely choose provider. The rationale is that consumer choice may improve the matching of consumers and providers and spur quality competition. Such improvements are contingent on consumers having access to comparative information about providers and acting on this information when making their choice. However, in the presence of information frictions and switching costs, consumers may have limited ability to find suitable providers. We use two large-scale randomized field experiments in primary health care to examine if the choice of provider is affected when consumers receive comparative information by postal mail and small costs associated with switching are reduced. The first experiment targeted a subset of the general population in the Swedish region Skåne, and the second targeted new residents in the region, who should have less prior information and lower switching costs. In both cases, the propensity to switch provider increased significantly after the intervention. The effects were larger for new residents than for the general population, and were driven by individuals living reasonably close to alternative providers.

Keywords: Consumer choice; Information; Switching costs; Primary health care; Field experiments

JEL-codes: D83; I11; I18

52 pages, May 17, 2017

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