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

Author

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  • García-Gallego, Aurora
  • Georgantzis, Nikolaos
  • Jaber-López, Tarek
  • Staffiero, Gianandrea

Abstract

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.

Suggested Citation

  • García-Gallego, Aurora & Georgantzis, Nikolaos & Jaber-López, Tarek & Staffiero, Gianandrea, 2016. "An experimental study on the effect of co-payment in public services," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 109-116.
  • Handle: RePEc:eee:soceco:v:65:y:2016:i:c:p:109-116
    DOI: 10.1016/j.socec.2016.08.002
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    References listed on IDEAS

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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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    7. 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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    More about this item

    Keywords

    Common-pool resources; Co-payment; Public services; Consumer choice;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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