Quotation Greiner, Ben, Zhang, Le, Tang, Chengxiang. 2017. Separation of prescription and treatment in health care markets: A laboratory experiment. Health Economics 26 (S3), 21-35.




Health care is a credence good, and its market is plagued by asymmetric information. In this paper, we use a laboratory experiment to test the performance of a potential remedy discussed in the applied literature, the separation of prescription and treatment activities. We observe a significant amount of overtreatment (and a smaller nonpredicted amount of undertreatment) in our baseline environment. Requiring a different than the treating physician to provide diagnosis and prescription for free is an effective way to reduce overtreatment in our laboratory setting. This effect, however, is partially offset by an increased frequency of undertreatment. Allowing prescription and treatment physicians to independently set prices for their services reduces efficiency due to coordination failures: In sum, prices are often higher than expected benefit of patients, who in turn do not attend to the physician. Also contrary to theory, bargaining power does not play a significant role for the distribution of profits between physicians.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Health Economics
Citation Index SSCI
WU-Journal-Rating new FIN-A, STRAT-A, VW-B, WH-A
Language English
Title Separation of prescription and treatment in health care markets: A laboratory experiment
Volume 26
Number S3
Year 2017
Page from 21
Page to 35
Reviewed? Y
URL http://onlinelibrary.wiley.com/doi/10.1002/hec.3575/full
DOI http://dx.doi.org/10.1002/hec.3575
JEL C72; C91; D82; I11


Greiner, Ben (Details)
Tang, Chengxiang (Guangzhou University, China)
Zhang, Le (Macquarie University, Australia)
Institute for Markets and Strategy IN (Details)
Competence Center for Experimental Research WE (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
5307 Business and management economics (Details)
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