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Optimal prevention when informal penalties matter: The case of medical errors

Author

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  • Grepperud, Sverre

    (Institute of Health Management and Health Economics)

Abstract

Individuals often respond with strong emotions to being penalised. Such responses suggest that informal penalties are important and play a role in creating deterrence. In this paper informal penalties are analysed in the context of medical errors. The introduction of informal penalties, if dependent upon formal ones, implies that: (i) the optimal enforcement regime becomes more lenient, and in some cases the lack of formal punishment is preferred, (ii) the first-best solution becomes unattainable, (iii) liability rates and formal penalty level are no longer perfect deterrence substitutes. In addition, powers of informal penalties provide a rationale for administrative sanctions (informal criticism, reprimands and warnings).

Suggested Citation

  • Grepperud, Sverre, 2009. "Optimal prevention when informal penalties matter: The case of medical errors," HERO Online Working Paper Series 2007:5, University of Oslo, Health Economics Research Programme.
    • Handle: RePEc:hhs:oslohe:2007_005
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    File URL: http://www.hero.uio.no/publicat/2007/HERO2007_5.pdf
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    Cited by:

    1. is not listed on IDEAS
    2. Kang, HeeChung & Hong, JaeSeok & Lee, KwangSoo & Kim, Sera, 2010. "The effects of the fraud and abuse enforcement program under the National Health Insurance program in Korea," Health Policy, Elsevier, vol. 95(1), pages 41-49, April.

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    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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