Question 2: Grossman model

An individual is diagnosed with Munchausen's syndrome, which means that they seek unnecessary medical treatment in order to gain sympathy. In other words, they do not dislike going to the doctor, rather they enjoy the experience.

1. (5%) Is this consistent with the textbook version of the Grossman model? Describe any changes that you would make to the model in order to rationalize this behavior.

2. (5%) Using the textbook version of the model, what is the effect of Munchausen's syndrome on the optimal level of health H ?

3. (5%) Do you agree with the prediction of the model? What is the more likely health outcome in practice?