Quotation Huck, Steffen, Lünser, Gabriele, Spitzer, Florian, Tyran, Jean-Robert. 2016. Medical insurance and free choice of physician shape patient overtreatment: A laboratory experiment. Journal of Economic Behavior and Organization 131, 78-105.




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.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Economic Behavior and Organization
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-A, VW-B, WH-A
Language English
Title Medical insurance and free choice of physician shape patient overtreatment: A laboratory experiment
Volume 131
Year 2016
Page from 78
Page to 105
Reviewed? Y
URL http://www.sciencedirect.com/science/article/pii/S0167268116301184
DOI http://dx.doi.org/10.1016/j.jebo.2016.06.009
JEL C91; I11; I13


Spitzer, Florian (Former researcher)
Huck, Steffen (WZB Berlin, Germany)
Lünser, Gabriele (-, Germany)
Tyran, Jean-Robert (Universität Wien, Austria)
Department of Economics (Sausgruber) (Details)
Institute for Markets and Strategy IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5953 Game theory (Details)
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