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Optimal mixed payment system and medical liability. A laboratory study

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  • Finocchiaro Castro, Massimo
  • Ferrara, Paolo Lorenzo
  • Guccio, Calogero
  • Lisi, Domenico

Abstract

In a controlled laboratory environment, we test the role of medical malpractice liability on physicians’ service provision under fee-for-service, capitation, and mixed payment. We find that the introduction of medical liability causes a significant deviation from patient-optimal treatment that it is not mitigated by the use of a standard mixed payment system. Specifically, we find that the presence of medical liability pressure involves a proper optimal calibration of mixed payment system. Our findings have relevant policy implications for the correct calibration and implementation of the mixed payment system.

Suggested Citation

  • Finocchiaro Castro, Massimo & Ferrara, Paolo Lorenzo & Guccio, Calogero & Lisi, Domenico, 2021. "Optimal mixed payment system and medical liability. A laboratory study," MPRA Paper 110276, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:110276
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    References listed on IDEAS

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    Cited by:

    1. Castro, M.F.; & Guccio, C.; & Romeo, D.;, 2022. "An assessment of physicians’ risk attitudes using laboratory and field data," Health, Econometrics and Data Group (HEDG) Working Papers 22/26, HEDG, c/o Department of Economics, University of York.

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    More about this item

    Keywords

    medical liability; defensive medicine; payment systems; physicians’ behaviour; laboratory experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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