Peaches and Lemons - Information Asymmetry in Dentistry
Akerlof wins Nobel in 2001
Information asymmetry, a term popularised by George Akerlof in his seminal 1970 paper 'The Market for Lemons', refers to situations where there is a mismatch in the information possessed by the buyer and the seller. Akerlof's paper, which earned him a Nobel Prize in Economics, illustrates this concept using the market for used cars. He showed how markets could collapse due to adverse selection. This is the phenomenon where sellers have more information about the quality of the product than buyers, resulting in the market being flooded with low quality products (lemons) because sellers of high quality products (peaches) withdraw, anticipating a loss due to their products being undervalued due to the ubiquity of lemons, and the buyers expectation of a lemon dominated marketplace.
Trust and Professional ethics is the antidote to information asymmetry in healthcare.
In the realm of professional interactions, trust and ethical conduct are pivotal in mitigating the pitfalls associated with information asymmetry. Trust, underpinned by the belief in another's honesty and competence, allows for smoother transactions despite disparate levels of information between parties. Professional ethics, which include principles of fairness, confidentiality, and diligence, compel individuals and organisations to handle information with integrity. Such ethical adherence ensures that all parties have access to accurate and necessary data, reducing opportunities for exploitation and enhancing transparency. Thus, when trust is intertwined with strong ethical standards, it effectively counters the inherent challenges of information asymmetry, leading to more just and productive professional engagements.
Bridging the information asymmetry gaps lead to more knowledgable dental teams
Using technology to reduce information asymmetry among dental assistants, front desk staff, and treatment coordinators is potentially a very high ROI activity for dental practice owners. This ensures that the whole team now have access to comprehensive patient information and in-depth dental knowledge, which was previously exclusive to professional practitioners. This could in turn lead to enhanced patient care. AI-driven systems can analyse patient data, treatment history, and crucially the academic evidence base to provide tailored recommendations and alerts to all members of the dental team to anticipate and address concerns proactively - How members of the wider team use this information should be a watch point for principal dentists and practice owners, and coaching and guidelines will no doubt need to be set as to what should and should not be communicated on behalf of the practitioner.
All roads lead to empowering the buyer - The patient
Jeff Bezos often says, Amazon's competitive advantage is a relentless customer focus. AI has the potential to empower patients by diminishing information asymmetry in dentistry. Patients can now query and prompt AI easily to gain insights into their health, understand their treatment options, and the implications of different procedures more rapidly and accurately than ever, making complex dental information more comprehensible than ever before. It's now safe to say that "Dr Google" was only the start. This is simultaneously a concern and boon. AI is only as good as the prompting. Patients may be led astray if their prompts carry erroneous assumptions, but if the prompts are good, then ifnormation assymetry will reduced, and patients will be able to make informed decisions regarding their treatment plans and purchasing decisions.
A win for practices and dentists that already deliver quality outcomes
In markets characterised by low information asymmetry, the 'peach', representing high quality goods in Akerlof's analogy, can be accurately assessed by buyers, leading to a flourishing market dynamic. Sellers of peaches are incentivised to maintain high standards, knowing that the quality of their products is transparent and will be recognised and rewarded by informed consumers. This not only boosts consumer confidence but also ensures that high quality products receive appropriate value, fostering a healthy market where merit and integrity are the pillars of economic exchange.
An unprecedented opportunity for startups to create venture size businesses and reduce information asymmetry along the way
Tech startups like CoTreat AI can leverage this nascent tech to create win-win situations for both buyers and sellers. AI has the potential to significantly reduce information asymmetry by employing advanced algorithms capable of collecting, analysing, and disseminating information efficiently. This democratisation of information, if used tactfully can empower all market participants with data that was previously available to only a few, thus levelling the playing field, optimising purchasing decisions. Thereby, creating a 'peach' economy in dentistry.
