An agency relationship under general conditions of uncertainty: a game theory application to the doctor–patient interaction

Abstract

The supply of information, particularly of bad news, in an agency relation-ship is a sensitive issue. We employ a game theory approach to investigate conflicts in the particular case of the doctor–patient relationship when information affects the emotions of patients. The doctor does not know the type of agent and the patient does not know how much information he is given. Hence, the paper obtains results when there is conflict, rather than common interest in the objectives of the two parties. The perfect Bayesian equilibrium describes beliefs and strategies which guarantee adher-ence to the doctor's recommendation. We show also that the patient may non-adhere to the recommendation not only when the doctor fails to identify the patient's needs but also if he falsely believes that the doctor has not done so.