Other-regarding behavior and motivation in health care provision: An experiment with medical and non-medical students

Other-regarding motivation is a fundamental determinant of public service provision. In health care, one example is physicians who act benevolently towards their patients when providing medical services. Such patient-regarding motivation seems closely associated with a personal sacrifice that health service providers are willing to make. Surprisingly, evidence on physicians' motivation is rare. This paper contributes to the literature by investigating prospective physicians', in particular, medical students', motivations and behavior. We measure the willingness to sacrifice own profit in order to increase the patients' health benefit. We conduct the same analysis for non-medical students. In a controlled incentivized laboratory experiment, participants decide, in the role of physicians, on the provision of medical services under fee-for-service or capitation schemes. Overall, 42 medical students and 44 non-medical students participated in five experimental sessions conducted between 2006 and 2008. We find substantial differences under both payment systems: compared to medical students, students of non-medical majors are less patient-regarding, less willing to sacrifice their own profit, and they state less motivation to improve patients' health. This results in significantly lower patient health benefits. Some implications for health care policies in light of physician shortage and for physician payment systems are discussed.