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

  • Grepperud, Sverre


    (Institute of Health Management and Health Economics)

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    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).

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    Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2007:5.

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    Length: 32 pages
    Date of creation: 03 Jun 2009
    Date of revision:
    Handle: RePEc:hhs:oslohe:2007_005
    Contact details of provider: Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
    Phone: 2307 5309
    Fax: 2307 5310
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