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Michael J. Dickstein

mjd [at] stanford.edu

322 Landau Economics Building
Ph: 650-723-0533
Fax: 650-725-5702

Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072

Interests: Industrial Organization, Econometrics, Health Economics

Working Papers

Efficient Provision of Experience Goods: Evidence from Antidepressant Choice
Draft: April 2014
Abstract: In the market for medical care, physicians often face uncertainty about how a newly diagnosed patient will respond to available treatments. I design a framework to analyze how price and promotion influence the learning process as the patient and physician jointly search for the most effective treatment. The dynamic model I employ accommo- dates large choice sets and permits learning to be correlated within clusters of choices. Applying this model to depression care, I identify policies that outperform commonly used tiered pricing. I find insurance designs that instead prioritize treatments with better adherence can both reduce spending and improve patient health.

Accounting for Expectational and Structural Error in Binary Choice Problems: A Moment Inequality Approach (with Eduardo Morales)
Draft: August 2013
Abstract: Many economic decisions involve a binary choice - for example, when consumers decide to purchase a good or when firms decide to enter a new market. In such settings, agents’ choices often depend on imperfect expectations of the future payoffs from their decision (expectational error) as well as factors that the econometrician does not observe (structural error). In this paper, we show that expectational error, under an assumption of rational expectations, is a source of classical measurement error, and we propose a novel moment inequality estimator that accounts for both expectational error and structural error in a binary choice model. With simulated data and Chilean firm-level customs data, we illustrate the identifying power of our inequalities and show the biases that arise when one ignores either source of error. We use the customs data to estimate the fixed costs exporters face when entering a new market.
Online Appendix
Matlab code for simulation exercise

Patient vs. Physician Incentives in Prescription Drug Choice
Draft: March 2014
Abstract: In response to the rise in health spending in the US, which totaled nearly $9000 per capita in 2012, insurers and government payers use two mechanisms to direct spending toward the most valuable treatments. The first set, “demand-side” incentives, impose costs on the patient to limit moral hazard. The second set, “supply-side” incentives, use the physician’s payment as a tool to minimize agency conflicts. I design a new test of the relative effectiveness of these two avenues in maximizing the value of treatment choices. Using variation in patients’ and physicians’ exposure to incentives, I find new evidence that physician-directed incentives may raise long-run costs. Physicians reduce office-based primary care in response to new payment regimes, substituting prescription drugs as well as referrals for speciality care. Short-run costs fall, but patients relapse at higher rates. I discuss the likely mechanism generating this trade-off and its implication for disease-specific insurance design.

Work in Progress

“Physician Responses to New Prescription Drug Information” (with Marissa King)

A Practitioner's Guide to Moment Inequality Estimation
 (with Eduardo Morales)