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There are many markets in which a seller simultaneously diagnoses a customer's needs and recommends a product or service to meet them. Customers have limited information on which to judge the merits of the recommendation and may, as a result, agree to excessively costly or unnecessary services. Plumbers, auto mechanics, and lawyers are just a few of the sellers who face the resulting potential for conflict of interest. In this paper, the authors examine whether the market does, in fact, punish overzealous sellers. They focus on the market for deliveries, a procedure in which a practicing obstetrician/gynecologist is faced with the choice of prescribing one of two possible modes: vaginal birth vs. a more highly reimbursed alternative, a cesarean section.
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