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An experimental study on the effect of co-payment in public services

Listed author(s):
  • García-Gallego, Aurora
  • Georgantzis, Nikolaos
  • Jaber-López, Tarek
  • Staffiero, Gianandrea

This paper aims to shed light on the impacts of imposing co-payment on public services, a strategy increasingly employed in the realm of publicly provided healthcare. We analyze the effect of imposing a charge for the individual appropriation of common resources. In our design, withdrawing the maximum amount is the dominant strategy for every player, but the resulting equilibrium is socially inefficient. We find that the presence of a price that is small enough to leave intact the conflict between individual incentives and collective welfare is not effective in reducing appropriation among agents who have previously been acting without it. In fact, the upward trend in the average extraction of common funds continues after the introduction of a price. In an alternative treatment in which we impose copayment from the outset of the experiment, withdrawals are lower than in the free-access baseline. Our results provide insights on the conditions for the effectiveness of co-payment in curbing the over-consumption of public resources.

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File URL: http://www.sciencedirect.com/science/article/pii/S2214804316300842
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Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 65 (2016)
Issue (Month): C ()
Pages: 109-116

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Handle: RePEc:eee:soceco:v:65:y:2016:i:c:p:109-116
DOI: 10.1016/j.socec.2016.08.002
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620175

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  1. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
  2. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
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  4. Drazen Prelec & George Loewenstein, 1998. "The Red and the Black: Mental Accounting of Savings and Debt," Marketing Science, INFORMS, vol. 17(1), pages 4-28.
  5. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
  6. Keser, Claudia & van Winden, Frans, 2000. " Conditional Cooperation and Voluntary Contributions to Public Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 23-39, March.
  7. Cardenas, Juan-Camilo & Ostrom, Elinor, 2004. "What do people bring into the game? Experiments in the field about cooperation in the commons," Agricultural Systems, Elsevier, vol. 82(3), pages 307-326, December.
  8. Pauly, Mark V. & Blavin, Fredric E., 2008. "Moral hazard in insurance, value-based cost sharing, and the benefits of blissful ignorance," Journal of Health Economics, Elsevier, vol. 27(6), pages 1407-1417, December.
  9. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62, pages 124-124.
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