Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142222
Authors: 
Huck, Steffen
Lünser, Gabriele
Spitzer, Florian
Tyran, Jean-Robert
Year of Publication: 
2016
Series/Report no.: 
WZB Discussion Paper SP II 2014-307r
Abstract: 
In a laboratory experiment designed to capture key aspects of the interaction between physicians and patients, we study the effects of medical insurance and competition in the guise of free choice of physician, including observability of physicians' market shares. Medical treatment is an example of a credence good: only the physician knows the appropriate treatment, the patient does not. Even after a consultation, the patient is not sure whether he received the right treatment or whether he was perhaps overtreated. We find that with insurance, moral hazard looms on both sides of the market: patients consult more often and physicians overtreat more often than in the baseline condition. Competition decreases overtreatment compared to the baseline and patients therefore consult more often. When the two institutions are combined, competition is found to partially offset the adverse effects of insurance: most patients seek treatment, but overtreatment is moderated.
Subjects: 
Credence good
Physician
Overtreatment
Competition
Insurance
JEL: 
C91
I11
I13
Document Type: 
Working Paper

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