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Liability for Medical Malpractice


  • Patricia M. Danzon


Physicians and other medical providers are subject to a negligence rule of liability. In a simple model, with perfect information and homogeneous physicians, a negligence rule of liability with an appropriately defined due care standard should induce complete compliance: there should be no malpractice, no malpractice claims, and no demand for malpractice insurance. The malpractice experience is seriously at odds with this prediction. First, what goes wrong? Second, if the system does indeed operate imperfectly, does it yield benefits in terms of injuries deterred that outweigh the high overhead costs of operating a liability system?

Suggested Citation

  • Patricia M. Danzon, 1991. "Liability for Medical Malpractice," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 51-69, Summer.
  • Handle: RePEc:aea:jecper:v:5:y:1991:i:3:p:51-69 Note: DOI: 10.1257/jep.5.3.51

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    References listed on IDEAS

    1. Doherty, N.A. & Dionne, G., 1989. "Risk Pooling, Contract Structure and Organizational Form of Insurance Firms," Cahiers de recherche 8935, Universite de Montreal, Departement de sciences economiques.
    2. Joseph P. Newhouse & Albert P. Williams & Bruce W. Bennett & William B. Schwartz, 1982. "Does the Geographical Distribution of Physicians Reflect Market Failure?," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 493-505, Autumn.
    3. Philip J. Cook & Daniel A. Graham, 1977. "The Demand for Insurance and Protection: The Case of Irreplaceable Commodities," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 143-156.
    4. Danzon, Patricia M., 1985. "Liability and liability insurance for medical malpractice," Journal of Health Economics, Elsevier, vol. 4(4), pages 309-331, December.
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    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets


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